Official hearing page

30 November 2022 – Colin Baker and Ian McCartney

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(10.00 am)

Ms Kennedy: Good morning, chair.

Sir Wyn Williams: Good morning.

Ms Kennedy: Chair, our first witness today is Mr Colin Baker.

Colin Baker


Questioned by Ms Kennedy

The Witness: Good morning, Mr Chairman.

Ms Kennedy: Mr Baker, you should have there in front of you a copy of your witness statement. Do you have that there?

Colin Baker: I do.

Ms Kennedy: If you turn over to the last page, is that your signature there?

Colin Baker: It is.

Ms Kennedy: Have you read through this statement recently?

Colin Baker: I have.

Ms Kennedy: Is it true to the best of your knowledge and belief?

Colin Baker: It is indeed.

Ms Kennedy: That statement is now in evidence in the Inquiry. Everything that I ask you now will be supplementary, and can I begin by thanking you for coming to give evidence to the Inquiry here today. I’m going to start by asking a few questions about your background. You started as a subpostmaster in 1968 in the head office in Stoke-on-Trent; is that right?

Colin Baker: Yes, it’s not actually a head office; it’s a Post Office in Birches Head in Stoke-on-Trent.

Ms Kennedy: After that, you then joined your local branch – or at that time you joint your local branch of the National Federation of SubPostmasters?

Colin Baker: I did, yes.

Ms Kennedy: Then you became involved in the North Staffs branch; is that right?

Colin Baker: Correct.

Ms Kennedy: Then you applied for a full-time position as Assistant Secretary at HQ?

Colin Baker: Yes, I did.

Ms Kennedy: That involved moving to Sussex; is that right?

Colin Baker: Yes, indeed, with my wife and two girls. Not very popular man at the time, I assure you.

Ms Kennedy: Then in 1986, you were appointed Deputy General Secretary of the Federation?

Colin Baker: Yes.

Ms Kennedy: Then you went on to become Deputy General Secretary in 1988 –

Colin Baker: Yes.

Ms Kennedy: – and General Secretary in 1999; is that right?

Colin Baker: That’s correct.

Ms Kennedy: You say in you statement – and if we could pull that up, please, it’s WITN03780100, and if we could turn to page 3 please. Looking at paragraph 7, you say there that you felt during your tenure this coincided with a period of great change at Post Office Counters. Could you explain what you meant by that, or a bit more?

Colin Baker: Yes. I’d love to. Coming from a position of being a subpostmaster, sort of trading on your own, and in your Post Office, and that was the beginning and end of your world, as it were. And the cash account was primary among them all. And moving to Federation headquarters I realised there was a much bigger world around subpostmasters than what I thought it was, and that world, I felt, was changing because I got to know the Benefits Agency were part of it, part of the change, Post Office Counters were clearly the prime movers in the change, there were other people in the Post Office, other unions, et cetera, and the feeling I had at the time was that if we didn’t change to meet the challenges ahead, we probably wouldn’t be there for very much longer.

I thought that it was a far more dynamic world than I was used to, and that’s what I meant by that, that suddenly we were thrust into another type of world, as it were, a world of economics, a world of automation, computers, et cetera, so much more than I ever thought possible at the time.

And so I realised that I had to come out of this, that sort of mental feeling of what post offices and sub post offices were, and where they fitted into this great big new world I was suddenly thrust into.

Ms Kennedy: One of the key issues was that the Benefits Agency wanted to start making payments into individual bank accounts. Why was that potentially a problem?

Colin Baker: Well, that was of the bread and butter, really, of a Post Office, a sub post office, anyway, that if you’ve ever witnessed outside a post office on a Monday morning or a Thursday morning, because they did what they call peak smoothing for payment of benefits at the time. It started on a Monday and then they moved to Thursday, then it moved back to Monday again. There would be queues outside the post office, no matter if it was raining, snowing or whatever, they were queueing for the post office to open and that queue was there nearly all day.

Obviously, we used to work hard to try to serve them quickly and get them back home but it was the bread and butter, that was the actual – the basis of, really, subpostmasters like myself becoming a subpostmaster, one because you served the public and you like the focal point within the village and you can imagine Birches Head was not that big so you become the focal point within the village and also serving the customers and that was where you derived your income from.

Your post office pay was based on the number of transactions you did, and those – the majority of those transactions at the time were pensions and allowance payments.

Ms Kennedy: Did you feel at the time that post offices could survive the BA withdrawing that line of work?

Colin Baker: Not unless it was addressed. If we just sat there and said “Well, okay, it’s going”, then we would go with it. But I felt at the time, and I mentioned – make the point in my statement, that we needed – we’ve got to address this. This is something we’ve got to address. And I was General Secretary at the time – I think I’m right in saying I was General Secretary at the time – and I felt the onus was on me to do something about it because as individual subpostmasters, far flung, ubiquitous, but you don’t really know your mate you know, because it’s not like a workshop union, they were individuals.

I felt the onus was on me and the Federation and I took it very seriously that we’ve got to address this, and that became my life’s work.

Ms Kennedy: At the time before Horizon was introduced, you would have been aware that subpostmasters could be prosecuted by the Post Office?

Colin Baker: Oh, yes.

Ms Kennedy: Also before Horizon, you would have been aware that subpostmasters or the Post Office could seek to recover losses from subpostmasters?

Colin Baker: Yes, that was all in the subpostmasters’ contract that they signed for the Post Office and with the Post Office, yes. Oh yes.

Ms Kennedy: Turning to the beginning of the development of Horizon, the NFSP and you were involved from the beginning when Pathway was announced as a chosen contractor; is that right?

Colin Baker: That’s correct.

Ms Kennedy: If we turn up a minute from 5 September 1996, that’s NFSP00000120. If we could scroll down, please. This is a letter from you to Executive Officers in 1996?

Colin Baker: Yes.

Ms Kennedy: You say:

“Further to the meeting at Pathway on 23rd July you will recall that we were keen to establish the Federation as a partner with Pathway and part of the formal development of the automation platform and its introduction into the network.

“I am sure you will be pleased with the attached letter which sets in train the first stages of that formal relationship. We will report further developments in due course at which time we hope to have a clearer understanding of the possible involvement of Executive Officers and, indeed, Branch Secretaries.

“You will also be interested to know that I have had a meeting with the company who are going to be training Sub-Postmasters. We have agreed to continue that relationship as training will be very important as it becomes linked to the rollout programme.”

If we turn over the page, and scroll down, this a letter from Paul Rich at Pathway to you, from 4 September 1996 and if we look at paragraph 2, it says:

“First, on more strategic issues, I will keep you in touch, on a personal basis, with overall progress, including an understanding of any critical political and commercial dimensions.”

So from the very beginning, you have personal contact with Pathway and you’re seen as the contact person at the NFSP; is that right?

Colin Baker: I was certainly the contact person in the NFSP, yes. The relationship – I think you said this was authored by Paul Rich?

Ms Kennedy: Yes, we can see this if we turn over the page.

Colin Baker: I think Paul Rich worked for the Post Office, not Pathway, didn’t he? Or at least when I knew him.

Ms Kennedy: Oh, my apologies. You’re right he did work for Post Office but this is being point person in relation –

Colin Baker: Oh yes, me and the rest of the people in Federation Headquarters of course, but I would be the letterbox.

Ms Kennedy: He was personally in contact with you?

Colin Baker: Yes.

Ms Kennedy: If we turn over to a circular from 25 September 1996 that’s at NFSP00000035. This is a circular that you wrote to the National Executive Council, and if we scroll down, this is talking about the Initial Go Live, isn’t it?

If we look, it says:

“I am sure you will be interested in the attached correspondence which is information regarding the progress of automation from the original ten offices previously advised to you [in] the next phase of a live trial.”

If we look down at the fourth paragraph, it says:

“It is planned to launch the system publicly when the remainder of the ten go live in October. This will clearly help us with our publicity as the first office was not a member. Whilst we had asked BA/POCL to hold off their publicity until a Federation member was involved in the trial, the lack of a public announcement was probably due to the forthcoming Conservative Party Conference and not because Leonard Stanley Post Office was not a member of the Federation. An article is being prepared for the next edition of the journal to provide members with additional information.”

We can see here that already you’re looking to publicise the NFSP’s involvement in the automation process; is that right?

Colin Baker: That’s correct but it’s not entirely the story. I did have an executive council and branch secretaries and members that wanted to see what the Federation was doing. So it was far better, in my view, for them to read it – not from my source – from other sources – than for me to tell them. So in part it was that. Yes, it was beating the Federation’s drum, of course, which I thought was my job.

Ms Kennedy: Did you feel at that stage that you really needed to push to get the project over the line for the benefit of your membership?

Colin Baker: Yes, and that didn’t stop there either. I had that feeling right until I finished.

Ms Kennedy: The NFSP had a negotiating committee; is that right?

Colin Baker: Yes.

Ms Kennedy: Can you tell us a bit about what the negotiating committee involved?

Colin Baker: Yes, they were all subpostmasters, they were all Executive Officers. So when you see there I’m writing to “Dear Executive Officer”, they’d be included in that. But they were a close team for me and we used to negotiate pay and conditions of service for subpostmasters and the negotiating committee were clearly involved in that. But so was I. So they were, if you like, my close committee to help me to form opinions and make decisions, and negotiate.

Ms Kennedy: If we could turn to a meeting minute, NFSP00000560. You can see there this is the report of the meeting of the Negotiating Committee.

Colin Baker: Yes.

Ms Kennedy: If we could turn over to page 7, please, this is the section that deals with counter automation, and it says:

“The General Secretary reported he had visited Newcastle on 27th and 28th May in the company of Paul Rich and John Bennett in which area OBCS was being installed in 100 Sub Post Offices. The reach from Sub-Postmasters was of delight.”

Do you remember that meeting in Newcastle?

Colin Baker: I do, yes.

Ms Kennedy: Can you describe what it was like?

Colin Baker: Well, it was in room not dissimilar to this, not quite so big, and there were subpostmasters in the audience. Paul Rich and myself, and I think there was someone else there as well. And we tried to stem any fears that the audience might have had and to make sure that they were on side, as far as the development of this was concerned. But we didn’t have anything to do with the actual equipment at that time.

Ms Kennedy: What fears did they have?

Colin Baker: Fear of the unknown, I think, quite honestly, that their post offices, by nature of being sub post offices, were much smaller than what you’d imagine. Some of them were quite tiny, and so they feared the disruption, they feared computers. I mean, it was a little while ago before everybody had – well, they might have had a mobile phone but that was about it.

So there were fears – fear of the unknown, fear of automation, fear of their post offices being disrupted, fear of not being able to look at the customer when they were serving them. That sort of thing. And they needed to vent, to be honest with you. And part of my style, I think, is to allow people to vent and then we can allay any concerns that they might have.

Ms Kennedy: So when it says there “The reaction from Sub-Postmasters was of delight” –

Colin Baker: Yes, it was.

Ms Kennedy: – what’s that in reference to?

Colin Baker: They were pleased that, at last, they were going to get some counter automation and some backing and some recognition. They were delighted.

Ms Kennedy: So they were delighted and fearful at the same time?

Colin Baker: Delighted at the decision that had been made to automate their post offices and fearful of what that really meant.

Ms Kennedy: The note goes on to say:

“The action points from the meeting were circulated (copy attached).”

If we turn over to page 21, we can see these are the action points, and there’s a list of them.

Colin Baker: Yes.

Ms Kennedy: If we could turn over to the next page, which is 22, and third bullet point down, it says:

“Subpostmasters not reporting all systems errors – distorting error rate figures.”

Can you explain what is meant by that?

Colin Baker: Well, I can try to remember what was said. I think that the problem is one well known to me, and that is subpostmasters working for the Post Office, if they had a shortage, knowing that in their contract they had to make good shortages – that was what they were contracted to do – that they didn’t always report them. They would just make good the sums, and move on.

But, of course, with the automation system, the Horizon System, they needed to report it, and that was the change. Because before, it was their Post Office, their cash account, they were responsible for the funds, they knew that, and so they didn’t always report shortage of, say, £1 or £2 or £3. They put the money in because next week they might have been £2 or £3 over, and so that was the relationship they had with the cash account and, therefore, that’s why they wouldn’t have been reporting. They were not used to reporting every error.

Ms Kennedy: So, at this stage, it was known that the sums showing on Horizon, subpostmasters would be required to account for those figures?

Colin Baker: Yes, oh yes. That’s a contractual thing.

Ms Kennedy: How did you feel about the system at this stage? We’re in 1997.

Colin Baker: Well, the system was one I grew up with – subpostmaster, not long since I stopped being a subpostmaster – and it was well accepted by subpostmasters that they made good shortages when they arrived, and so – and I can tell you that I’ve spent many hours – we used to balance on a Friday night then – I’ve spent many hours on a Friday night trying to find money that wasn’t balancing but, eventually, you’ve got to go through, you’ve got to count every stamp and every pension. You’ve got to get – really, really ground everything within your Post Office, and that’s how you reached a balance. And if you did miss something when you were counting the stock, then you’d have a misbalance, and so you’ve got to keep working until you’ve found a balance.

Ms Kennedy: So at this stage, you were already flagging up to subpostmasters that they really must report errors because they’ll be held accountable for them?

Colin Baker: No, not that specific, not that specific at all. I mean, I didn’t recognise at that time that the fact that they weren’t reporting all shortages was going to be – well a heinous thing. I, in my innocence, thought that the relationship that the subpostmaster had with the cash account was still the same. I know it was automated but it would still be his Post Office and the money that he’s responsible for. So, no, I didn’t see it in quite the light you’ve just described.

Ms Kennedy: There were delays with the Horizon project, weren’t there?

Colin Baker: There were.

Ms Kennedy: Did you find those frustrating?

Colin Baker: I did.

Ms Kennedy: If we could turn up a meeting minute from the National Executive Council, NFSP00000461. This is in March 1998, and if we turn to page 17, and if we can scroll down to the “Counter Automation” section, it says:

“The minutes of the Negotiating Committee reflected the situation which existed at the time. There had been a great deal of press speculation about the future of the Horizon Platform and that speculation was growing.”

What were the press saying at that time?

Colin Baker: I think the press were saying that it was doomed. That they’d never seen a successful PFI in their life and this was another one that was going to go down the tubes. Basically saying that. They didn’t quite use that language.

Ms Kennedy: “Intelligence sources are still saying that the Benefit Agency would like to be disengaged from the project and concentrate on ACT and an updated ALPs style of fraud detection. Everyone in Post Office Counters, the Corporation and ICL Pathway were involved in keeping the Government interest in Horizon and the Federation was fully involved with all those and the DTI. The news that John Denham MP would be at Conference was an excellent signal of commitment and his interest must be maintained.

“The General Secretary commented the press reports were predominantly true, with Government Computing containing leaks from the Benefits Agency.”

What was morale from the subpostmasters like at this time? What were you hearing on the ground?

Colin Baker: Um … I can’t really remember the comments from subpostmasters. I mean, they were many and varied. The morale certainly around me at the time, was one of disappointment, because we really needed this automation. I think that, hopefully, it comes through in spades. We really needed it. And I was disappointed that the speculation of our people writing magazines and novels, that it was in peril, and I was really, really disappointed with that.

I spent a great deal of time trying to find out precisely what the situation was but I was never allowed close to Pathway and Fujitsu. I was always told, you know, everything’s okay.

Ms Kennedy: You said you went to a great deal of effort. Who were you speaking to and what channels did you use?

Colin Baker: I’d speak to anybody, go anywhere, and use any channels to find out, and that did take a lot of time and energy. But, predominantly, Post Office Counters Limited, who always reassured me, and I’m sure that’s what they thought at the time. I don’t think they were just purposely misleading me. And I was reading newspapers and I got a research officer at Shoreham who was also reading. We were keeping – trying to keep an eye on it because this was clearly very, very important for us, and what I didn’t know at the time was just how many people were involved in this decision and how many people were involved in bringing it – bringing the automation to market. I was amazed to find out, and a lot of it with this hearing.

Ms Kennedy: You also made press releases in support of the project, in response to some of the press coverage. If we could turn up NFSP00000280, and if we could turn on to page 4., it says:

“The National Federation of SubPostmasters, which represents 85% of the UK’s army of Sub-Postmasters has criticised the media obsession of denigrating the Horizon/automation project, the system which will automate all post offices to provide benefits payments and banking services in the future.

“General Secretary, Colin Baker, acknowledged that press speculation was inevitable, particularly with the Treasury Review now reaching a critical stage. Nevertheless, this most recent speculation was now causing concern amongst Sub-Postmasters. Mr Baker reminded everyone that the Minister for Welfare Reform, Mr Frank Field MP, had not only sent his PPS, Kate Hoey MP, to our Annual Conference to report good news for the network, but had followed it up with a letter confirming key points.”

So you were publicly defending the project at this stage in 1999; is that right?

Colin Baker: Let’s be specific on this one. I was publicly defending the principle of automation in post offices. I wasn’t publicly defending Pathway or anybody else. It just happen to be Pathway, but that was not my choice.

Ms Kennedy: But at this stage, you said you put a lot of effort in tying to get to the bottom of what was gong on –

Colin Baker: Yes.

Ms Kennedy: – and you were being neglected and people weren’t engaging with you; isn’t that right?

Colin Baker: No, I think they did. I think they did engage with me. They might have been saying what they thought I wanted to hear, and I can’t speak for them, obviously, but I don’t think I was ignored, as such. I think I might have been held at arm’s length, as it were.

Ms Kennedy: Because it would have been a problem for the Post Office, wouldn’t it, if the Federation turned against the Horizon project?

Colin Baker: Oh yes, it would have been a problem for subpostmasters as well.

Ms Kennedy: Because the Post Office had an interest in ensuring that it continued to have your support, precisely because you would release press releases like this; isn’t that right?

Colin Baker: Yes, I think the Post Office sometimes wondered what was I doing, what was I about. But on this occasion we happened to be on the same plane.

Ms Kennedy: You were part of the Horizon Working Group in 1999 –

Colin Baker: Yes.

Ms Kennedy: – and you were invited to join this group by Sir Ian McCartney. If we could turn up NFSP00000064. If we could look at the second paragraph – or rather, sorry, the first paragraph:

“You will know that following the recent agreement in principle with ICL on completing project Horizon in a restructured and simplified form, the Secretary of State asked me to set up a small working group of key players to help ensure that the project is now taken forward in a positive and decisive way to a successful conclusion.

“I have decided to invite four organisations to be full members of the Horizon Working Group, namely the Post Office, the Communication Workers Union, the Communication Managers Association and the National Federation of SubPostmasters. Clearly we need a dialogue with other organisations including ICL, the Department of Health and Social Security, the Benefits Agency and the Treasury, but I have not thought it appropriate to include them as full members.”

Then if we scroll down, we can see that there are three – he proposes that the group’s work would fall into three main areas. So, firstly:

“… there are the negotiations between POCL and ICL, and between POCL and BA, that need to take place over the next few weeks to put in place the detailed contractual arrangements that will give effect to the outline agreement reached on 24 May. I see a role for the Working Group in carefully monitoring these negotiations and in addressing and helping to resolve any sticking points that may be encountered.

“The second area covers the remaining development phases of Horizon, including large scale live trials, system acceptance, and rollout of the system smoothly and in a timely fashion to all offices within the network followed by the migration from paper-based methods of benefit payment to ACT-based payments accessible at post offices. I believe that the Working Group could provide a valuable forum for bringing pressure to bear when needed for seeking solutions to any problems that may arise.”

If we can go on:

“The third area concerns the commercial exploitation of the very considerable potential which the Horizon platform will offer once in place. The combined experience of the Working Group should prove a valuable source of ideas and contacts for business opportunities and future revenue streams.”

Does that reflect what you saw the Horizon Working Group to have been set up to achieve and is that how you found the meetings? Did it cover those areas?

Colin Baker: It certainly – I agreed with what it was designed to do or what it was put in place to do. We didn’t, as far as I’m aware, anyway, get involved in the negotiations between Pathway and the Post Office and anybody else for that matter. But we did certainly inject ideas regarding the future and how to use the Horizon platform or how we wanted to use the Horizon platform. That was most definitely that – and we also had a say in the type of publicity which the Benefits Agency were putting out, because it was clear from that point that the Benefits Agency didn’t particularly want Post Office automated.

Ms Kennedy: Did you see your role as providing feedback on the Horizon system itself?

Colin Baker: Not in that committee, no. We certainly did feed back to the Post Office, to Post Office Counters Limited, about the Horizon platform, and we did that a lot, but I can’t – I genuinely can’t recall whether that forum was one that took on board our comments regarding the operation of Horizon.

Ms Kennedy: When Mr Sibbick gave evidence to this Inquiry he said that this was designed as a channel for feeding back from subpostmasters on the system. Would you accept that?

Colin Baker: It might have been set up to do that. I don’t think it did.

Ms Kennedy: It didn’t because you didn’t raise those issues, or because they weren’t interested in discussing them?

Colin Baker: It was at a higher level. I think, anyway – this is going back a little while – I think that it was discussing things on a higher level than what subpostmasters at the time were feeding to me, which was, you know, the scales don’t work, there’s lots of dropouts for the screen. That type of thing, that they were experiencing their problems in their post offices, wasn’t the right – or didn’t appear to be the right forum to have been having those sort of discussions.

Ms Kennedy: What would have been the right forum?

Colin Baker: The forum I was using, which was I went to the Post Office and spoke to them at length about it, and reported it, and, you know, anyone that – anyone would listen.

Ms Kennedy: If we could look at BEIS0000345. Yes, that’s the one. Thank you. This a steering brief from David Sibbick, and if we turn over to page 2, this is from 7 June 1999, and scroll down to paragraph 5, please. It says:

“The NFSP are likely to warn that fears about the future viability of post offices will lead to further loss of confidence amongst subpostmasters and post office closures, especially in rural areas. They will ask what the Government intends to do about the obvious and very large funding gap that will open beyond 2003 with the progressive disappearance of the BA revenue, against the repeated commitment by Ministers to the nationwide network of post offices. Given the lack of Ministerial consensus on the way forward on this issue the answer has to be that we look to the members of the group to work together to maximise the very great commercial potential of the Horizon platform, but that the Government will be discussing the longer term viability of the network with the Post Office in the context of the Strategic Plan.”

Was that your position at the time, that you were fearful about the viability of post offices?

Colin Baker: Yes.

Ms Kennedy: Again, this was partly because of the disappearance of BA funding?

Colin Baker: Yes, as I’ve explained, this was a fundamental part of the daily life of a subpostmaster.

Ms Kennedy: In your mind, this was the key issue at the time –

Colin Baker: Yes.

Ms Kennedy: – to raise with the Government?

Colin Baker: Yes, yes. At the time.

Ms Kennedy: Did you feel that this was a particularly difficult time?

Colin Baker: It was. In fact, I had some meetings with the Benefits Agency people themselves and, suffice to say, they were brutal negotiators. They really didn’t want this through Post Offices and they made that very clear. We really, really did, so you can see we didn’t see eye to eye very often.

Ms Kennedy: If we could turn to NFSP00000026, please, and if we turn over to page 2. This is a note of the meeting of the Horizon Working Group on 8 June. I think this was the first meeting, does that sound about right?

Colin Baker: Yes.

Ms Kennedy: It records the issues that you raised. If we could scroll down. If we look at paragraph 1, it states:

“Mr McCartney began by acknowledging that negotiations on the Horizon project had been protracted and difficult. He hoped that, following the announcement on 24 May, the Working Group could keep discussions on track for a successful agreement by 16 July. The Group would bring together various strands and give political accountability. From the Government’s viewpoint there clearly needed to be more effective monitoring and oversight of the project.”

If we scroll down to paragraph 6, we can see that you raise an issue at this meeting saying you had “a fundamental point to raise”. This was to do with the wording of the second term of reference, “methods of payment also accessible through post offices”. It says that you felt that that would send the wrong signal to post office staff and subpostmasters:

“Where was the long-term protection for the network?”

Was that a contribution that you remember making at the –

Colin Baker: Yes, it was, yes.

Ms Kennedy: At this time, did you know that subpostmasters were having difficulties with the Horizon project and that there were difficulties balancing?

Colin Baker: I wasn’t – I knew they had difficulties. They had difficulties with, as I’ve mentioned before, screens and dropouts, and all that type of trouble. And I wasn’t aware that there was a major – which I am now, of course, I fully accept – and there was a major problem with the balancing. And I think it’s because of something you asked me earlier on, which was the contractual relationship and making good losses.

There has always been losses in post offices and gains, I imagine, and so that was – that bit there was typical, I think, of the everyday working, and so that didn’t particularly draw my attention, I don’t think, at the time. But others did, and this was the Horizon Working Group, if you remember, and what we were discussing was Horizon, and the sort of thing that happens with the – the counter screen had to be moved and all that sort of a thing. It was a real, real mêlée of different things, of which that was one. But I didn’t attribute any great concern to it, because it was always thus. What I didn’t know then which I know now, of course, was the scale of it.

Ms Kennedy: Do you accept that it was a mistake not to raise this clearly in these Working Group meetings, these kind of issues?

Colin Baker: No, I don’t think I do. I mean, it’s a wise man who knows what he doesn’t know, and I didn’t know what was looming – what was on the pot boiling. It was – I was going to say it’s fundamentally – I think what we’re talking about isn’t that, is it?

Ms Kennedy: What, sorry?

Colin Baker: Well, you’re drawing paragraph 6 my attention.

Ms Kennedy: Yes, so essentially what I’m putting to you is you’re drawing issues out to do with the terms of reference.

Colin Baker: Yes.

Ms Kennedy: This would have been an ideal time to say, “Well, actually, leave aside the terms of reference, subpostmasters are having real difficulties with using this new project. It’s a real problem”. But you didn’t do that?

Colin Baker: No, because, at the time, it wasn’t a great issue. Now, I fully accept it was boiling up to become one but, at the time, it wasn’t. We were talking about the terms of reference, and the terms of reference – there was the Benefits Agency putting out a leaflet which said words to the effect of “Oh, and you can always go to the Post Office if you want to”, it was promoting Automatic Credit Transfer into people’s bank accounts and all I was doing in that meeting, at that point, was saying to them “Just a minute, let’s have a level playing field if nothing else”.

So that was really not related to counter losses and the operation of Horizon by subpostmasters. That was referring to that – it was a high-level meeting. We’ve got Ian McCartney and people in there like that. It was referring to the terms of reference that were – people were going to follow as it went through. And my concern at that point was, “Let’s have a level playing field. Let’s not have Automatic Credit Transfer and just mention subpostmasters en passant. That’s what I was about at that point.

Ms Kennedy: We can see further issues that you raise at this meeting if we turn to page 4, and if we look at paragraph 11 and 12:

“On Mr Baker’s point about long-term security for the network, Mr McCartney pointed out that even the benefit payment card would have been a relatively short-term solution, which was never envisaged to have a long-term future given the accelerating trend for the new benefit recipients to opt for ACT.

“Mr Baker accepted Mr McCartney’s point that the job now was to secure the success of the platform, but argued that the Post Office should be flagged up in the terms of reference as the preferred port of call for benefit recipients.”

Was that your position at the time: that the job was to secure the success of the platform?

Colin Baker: Yes.

Ms Kennedy: This was despite the fact that you didn’t have the technical expertise to assess the viability of the platform itself?

Colin Baker: That’s correct. I didn’t have. But I put my trust in the Post Office and others that did have the expertise, or at least I hoped they had. They were the ones that negotiated the contract, not me. But I did throw myself and the Federation wholeheartedly behind it. Because without automation, without that sort of counter automation, we would be doomed, I’m sure. It was life saving for us.

Ms Kennedy: What did you know at this time about the reasons why the Benefits Agency had withdrawn from the project?

Colin Baker: I don’t think I, or anybody else on our side of the dealings really knew why, other than it was a question of how much it cost the Benefits Agency to push order books through, the amount of fraud that the order books attracted. That was what I thought. But I didn’t really know.

Ms Kennedy: Did you ask anyone at the time?

Colin Baker: Yes, I asked the Benefits Agency.

Ms Kennedy: Moving forward slightly to the 10 June 1999, if we could pull up NFSP00000479, this is another report of the meeting of the Negotiating Committee, and if we could turn to page 9, please; these is the start of the discussion about counter automation. It seems like this was a standing item on the Negotiation Committee at the time. Would that have been right?

Colin Baker: That’s absolutely right yes.

Ms Kennedy: If we could turn over to page 12, please, and scroll to the bottom. We can see that it’s recorded:

“The General Secretary and-on Peberdy advised the committee that they’d gone to the meeting with the preconceived idea that attempts would be made to ‘buy them off’ and placate them with platitudes. However, it appears the government are worried about the extent of the Federation’s influence and it is our intention to keep them worried. The Federation has a substantial role in the Working Group and will be in prime position to have as much influence as possible. The Minister is under no illusion that the Federation intends to bide its time and see what it is to be delivered before taking any further action.”

Is that what you said at the time?

Colin Baker: Well, that’s recorded in the minutes. I can’t genuinely remember what I said, but that’s in the minutes so I imagine, yes.

Ms Kennedy: Did you feel like the Federation could have a substantial role in the Working Group and be influential?

Colin Baker: Yes.

Ms Kennedy: On this same page, if we look further down, it says – sorry, just scrolling down.

Colin Baker: That’s all right. I’ll have a drink while you’re doing that.

Ms Kennedy: Please let me know if you need a break at any time?

Colin Baker: Yeah. I’m fine, just thirsty.

Ms Kennedy: It says:

“Some subpostmasters have had enormous difficulties balancing up and finishing their cash accounts, even to the point of still struggling to finish on Friday nights.

“Tomorrow’s special Executive Council meeting, which is being attended for a short time by Stuart Sweetman and David Miller, is crucial to finding out what has gone wrong with the Horizon programme. ICL Pathway/POCL say it’s not the system.”

Do you see that there?

Colin Baker: Yes.

Ms Kennedy: So, at this time, it sounds like a very serious issue that subpostmasters are reporting enormous difficulties balancing up. To you, was that business as usual or was that new?

Colin Baker: No, that’s when we sensed that it was escalating. Hence we got David Miller and Stuart Sweetman along to the meeting to account for themselves, and for them to hear for themselves what the Executive Council was saying. Because we only – we at Federation headquarters know what the subpostmasters said to the branch secretary and what the branch secretary said to the Executive Council, because these are Executive Council meetings. And so what we wanted from that meeting was for Stuart Sweetman and David Miller to hear for themselves, not from subpostmasters, from the representatives ourselves, exactly what they were being told by subpostmasters.

Ms Kennedy: You said this issue was escalating. Where was this now on your list of priorities as General Secretary?

Colin Baker: Right up at the top. I spent more time on this – and I think you’ll be able to see it from the evidence you’ve got there – of just how much time did have to spend on this. In fact, I don’t think I was a proper dad and a proper husband at the time. I was really, really focused on getting this system into post offices to ease subpostmasters’ minds and give them a bit of money.

Ms Kennedy: You mentioned the meeting the next day on 11 June. If we could turn that up which is NFSP00000539. This is a special meeting of the National Executive Committee, and if we could turn to page 7, please and we can scroll down. We can see this is where Mr Sweetman and Mr Miller joined the meeting because they only joined for part of it; is that right?

Colin Baker: Yes.

Ms Kennedy: If we look at after they join, we can see that they’re welcomed and then if we look at the paragraph beginning “Mr Sweetman”, it says:

“Mr Sweetman thanked the Chairman for the invitation to [meet]. He introduced Mr Miller who had two roles. He was the existing Role Programme Director of the Horizon Programme, a position he had held since the beginning of the previous year, and Managing Director of the new Post Office Network Business Unit. In the latter role he would be responsible for all things to do with the Post Office Network and the interests of the Federation and its members. Mr Sweetman’s objective at the meeting was to try to bring the Committee up to date, from his point of view, on the path that they had to tread and the route that POCL and the Federation must travel together if they were going to be successful in partnership.”

If we scroll down again, it says:

“Automation would continue. All the central payments and communications would go into the post office but there would not be a Benefit Payment Card on the system. Benefits would be paid by barcoded savings books. The contract would run until 2005 by which time benefits would only be paid by banking system or emergency Green Giros. The contract with ICL would change from PFI transactions, only going through the system to one where The Post Office effectively purchased the system from ICL Pathway.”

A moment ago you said it was important for Mr Miller and Mr Sweetman to come to this meeting and to answer your questions. They seemed to think that they’re coming for a more general discussion about the project. Would you accept that?

Colin Baker: Yes, I would say, as well: they would, wouldn’t they?

Ms Kennedy: If we can scroll over the page, we can see number of questions that are put to Mr Sweetman. They’re to do with ACT, and if we scroll down further, resultant loss of benefits, agency work. Then scrolling down:

“What plans do you have to:

“a) become a bank?

“b) combat the threat?”

Scrolling over the page:

“c) Secure other work/income for the Network?

“d) reduce your costs?”

Scrolling down again:

“How will this decision affect the agreement that subpostmasters will not have to pay for the automation of their offices?”

So there’s quite a lot of discussion with Mr Sweetman about things other than the difficulties that are being suffered by subpostmasters; isn’t there?

Colin Baker: Yes.

Ms Kennedy: If we scroll over the page, so when we get to Mr Butlin, it says:

“Mr Butlin referred to the serious problems that the South West was having with the software, especially with the balance, and asked Mr Miller whether any changes were to be made in that respect. An assurance was sought by the Committee that the balance would become more user friendly, more logical and easier for subpostmasters to use. Would it be possible for subpostmasters to have more input into the way the balance was done. The North East was facing similar problems, subpostmasters were incurring additional staff costs, an example being around £350 in the four weeks that his office had been up and running.”

So it was at this stage that the software issues are raised, isn’t it?

Colin Baker: Yes.

Ms Kennedy: That’s what Mr Butlin is referring to, is the difficulties that subpostmasters are having?

Colin Baker: Yes.

Ms Kennedy: Do you feel like this, as you said, very important issue has got buried amongst a lot of the other issues that were raised at this meeting?

Colin Baker: Um, there was certainly a lot of issues raised in the meeting. But I wouldn’t have said that any particular issue got buried. It was a – you can imagine running a union, particularly with the Post Office, there’s lots of issues to be gone through on the agenda. We had to deal with all of them. And you’ll notice that Mr Miller actually made comment to that point later.

Ms Kennedy: Yes, if we scroll – sorry, if we scroll down, I can show you that. It says, this is what you were referring to:

“Mr Miller acknowledged there was a problem and … there would be a software change to improve the situation.”

Colin Baker: Yes.

Ms Kennedy: “If there were serious problems that could not be overcome in the timescale the rollout would be delayed.”

Would you accept those are two conflicting points, though: that if there were problems the timescale for the rollout would be delayed, and that’s not something you wanted either, was it?

Colin Baker: No, but we did want it to be right. We didn’t want to have automation at any cost, and with warts and all. We wanted it to be right, and so we not only would be pressing the Government and the Post Office and anyone else that “Let’s have this automation in Counters, it’s vital”, but also, we wanted it right. Of course we did.

Ms Kennedy: If we could turn over to page 14, please. I think at this meeting there was a discussion about whether or not the Federation should stay and work with POCL or break away; is that right?

Colin Baker: Yes, it was a– it was a suggestion by one of the Executive Council, yes.

Ms Kennedy: Why was that? Why was there a suggestion of breaking away?

Colin Baker: I think the feeling that we all had – I had the feeling as well – that we were only told what they wanted us to know, you know. They were involved in the negotiations with ICL and Pathway. They knew what the Benefits Agency and what the Treasury, and that, people were saying. Very didn’t. We were, if you like, artisans on this one. We were foot soldiers, and doing our best to get this automation in. But it needed it to be right. And so there was a view that, well, let’s cut and run. Well, I mean, we had suggestions on the Executive Council about buying a bank, buying National Savings, all those things but you talk them through and people realise that maybe it wasn’t such a good idea after all.

Ms Kennedy: If we look at the bottom of that page 14, we see a comment from a Miss Lindon?

Colin Baker: Yes.

Ms Kennedy: “Miss Lindon referred to the controversy concerning the plans for Horizon and questioned whether the Federation was getting the package they needed. She suggested that this, being negotiation time, was an opportunity for POCL to talk to ICL … about modifying and simplifying the package before it was too late.”

Would you agree with that? Was that a possibility at that time, or did you see that as off the table?

Colin Baker: No, I saw it as a possibility at the time, and that was what we discussed with David Miller. And that wasn’t – there wasn’t a one meeting with David Miller; we had regular, regular meetings with David Miller. And, I have to say, he was very good and he did understand whether – whether David Miller could change anything, I don’t know, but he could certainly influence it from the Post Office Board, which is where we needed it to be influenced.

I eventually got to the Post Office Board, to the Chairman, Allan Leighton, but my style is to gather in people that would support us and let them do the supporting, and David Miller was certainly a supporter.

Ms Kennedy: The note goes on to say:

“The Chairman advised that Mr Miller had requested a list of all the problems with the software and he would address them and talk to subpostmasters to see what they wanted on the programme. He was embarrassed that this had not happened already.”

Did you get a list of those problems with the software?

Colin Baker: Well, yes.

Ms Kennedy: Did you understand what they meant?

Colin Baker: Yes.

Ms Kennedy: It also goes on to say:

“It was important that members be advised immediately of the outcome of this meeting and this needed to be done in a way that would make them aware of the seriousness of the situation, without resorting to scaremongering.”

Why was there a concern about scaremongering?

Colin Baker: Well, because we mentioned before about the bad press that this was getting, and I didn’t want – or we didn’t want that to be fuelled, you know. We wanted to – we didn’t want to wash our dirty linen in public, put it that way. We wanted this to be a success. We still wanted this to be a success. And so what we didn’t want to do was to scaremonger so that people who wanted to could write articles about it, nasty ones.

Ms Kennedy: Turning forward to 14 June a few days later, there’s a Select Committee hearing and if we could turn up POL00028522, and if we could look at page 2, we can see there the record of the Trade and Industry Select Committee meeting. If we turn to page 6, we can see this is the “Submission by the National Federation of SubPostmasters”. Were you involved in putting this together?

Colin Baker: Yes.

Ms Kennedy: If we turn to page 9, this is a section on “Programme Delivery”. If we look at the third paragraph, underneath “Programme Delivery”:

“On the system side, our understanding is that the system had been moved successfully through the final stages of testing prior to addition of the remaining officers to make up the balance of 300 taking part in the formal live trial. The training courses, go-live arrangements and support arrangements both at offices and via the helplines were ready to ensure a successful trial prior to national rollout.”

You don’t mention in your submission that there are subpostmasters who are suffering difficulties with using the system, do you?

Colin Baker: No.

Ms Kennedy: Why was that?

Colin Baker: Well, I think, as I said before, this was – this has got a slow roll. It wasn’t immediately big and serious. This was – most certainly we couldn’t take our eyes off it, but it was a slow roll. And there’s always been losses in sub post offices and, you know, they’ve been addressed over time. But I could only repeat to Government and to the Select Committee what’s been fed to me and that comes through the Branch Secretary, the Executive Council, and then the meetings and the subpostmaster – and the subpostmasters would write to me as well, and it was not an issue, in my view, at the time to be raised to the Select Committee.

Ms Kennedy: Shortly after this, on 21, 22 and 23 June, there’s a National Executive Council meeting and, if we could turn that up, it is at NFSP00000471.

Colin Baker: Yes.

Ms Kennedy: If we could turn to page 22, please, and scroll down to the bottom, we can see here that this is where counter automation begins to be discussed again. If we turn over on to page 23, and we look at the second paragraph, we can see it says:

“The General Secretary described an excellent radio interview broadcast on the Jimmy Young show, Radio 2, with himself and the Labour spokesman Mr Martin O’Neill. The Select Committee meeting he had attended with Mr Peberdy had gone very well. They appeared to be given longer to speak than anybody else and he felt they had given a good account of themselves. The Select Committee seemed very much in favour of sub post offices.”

Is that how you felt about that Select Committee meeting?

Colin Baker: Yes, it was.

Ms Kennedy: If we scroll down, it states:

“There was general discussion on the severe difficulties being experienced by subpostmasters who are already running an automated system. Seven sheets of comments from the North East had been passed to Mr Dave Miller. The difficulties and trauma being experienced by some subpostmasters were giving rise to concerns for their health and emotional wellbeing. It was felt by some that a tragedy was not far away if something was not altered soon. The software was considered to be poor quality and not intended to run such a huge network. The system is based on ECCO which was originally written for a network of 700 – not 15,500.”

Do you remember these comments being made at this meeting?

Colin Baker: Yes.

Ms Kennedy: How did the subpostmasters feel or how did the representations that you were hearing sound? Does this accord with it?

Colin Baker: Yes, it does.

Ms Kennedy: So people were discussing trauma. Yes?

Colin Baker: Yes.

Ms Kennedy: Was that very concerning for you?

Colin Baker: Of course it was, yes.

Ms Kennedy: Was that something you felt you needed to action immediately?

Colin Baker: Yes, and we did. And I was reassured that it couldn’t possibly be the Horizon programme, that was perfect. And I went through a process of seeing different people at different heights within the Post Office and that was the standard answer I received. It was a very difficult time, to be honest with you, and it just seemed as though, with all the pressurising we were doing to people, that was the answer we were giving.

Ms Kennedy: It goes on to say:

“Although there may be improvements to the general system, most members present wanted to know if the Committee had the power to say that the current system is obviously not working and instruct ICL and the Post Office to review or restart with more subpostmaster friendly software.”

Was that something that you considered?

Colin Baker: Well, I didn’t think in my wildest dreams we’d be able to get the Post Office or anybody else, for that matter, to – we couldn’t instruct them, ICL or anybody, to change the system, but they were left in no doubt how we felt about it, and that we weren’t satisfied with the sort of answers that we were getting.

But, even worse than that, we weren’t satisfied with the way that the security division were treating subpostmasters, as though they didn’t have any say in the matter at all. That was awful. I mean, it’s bad enough for the system to be not good, but for the Post Office to follow up – the security division to follow it up with browbeating and pressurising subpostmasters was unforgivable.

Ms Kennedy: But why did you feel you couldn’t go to ICL and the Post Office and say, “Look, why don’t you start afresh?”

Colin Baker: Well, we didn’t have any negotiating powers with ICL, of course. We could only ask, and the Post Office we did ask. We did ask, and we were told, you know, “It’ll work its way through”.

Ms Kennedy: If we turn over to page 24, we can see some of the further concerns that were raised by subpostmasters. Sorry, if we could go back to the previous page, it starts there:

“Mr Marshall reported that it took two hours for his printer to come back up and since then, after printers on different counters had gone down, it has taken at least two hours for each to become operational again. Rebooting the system takes at 12 minutes and, taking into account all the time spent on the telephone with the helpline, it takes many hours to balance on Wednesday afternoon. There have been reports of subpostmasters working until 10.00/10.30 pm which is not only stressful, but eroding their free time.”

Scrolling down:

“Mr Jannetta said that he and others of his colleagues would have to rely on those subpostmasters in the North East and South West who currently have this system in place, to make sure their voices are heard with their problems and to ensure that all the difficulties encountered are satisfactorily overcome. The point must be clearly made to the Business that this automation is not going to do the job, that subpostmasters have learned enough to know it will not work satisfactorily and that it must not be rolled out to an excess of fifteen thousand sub post offices until all the problems have been overcome.

“The Richard Jackson automated system was considered by both Mr Marshall and Mr Darvill to be an easier to use, preferable, alternative to the present system. Mr Darvill wanted to know if the lawyers had some hold on the Horizon System for some reason, that it could not be changed.”

How did it make you feel, hearing stores like this?

Colin Baker: I was very, very uncomfortable at the time throughout, because I felt as though I was banging on doors to make my points made, but I was sent away with some smooth words, and – but I felt helpless, really, in not being able to go to ICL. I did have meetings with – well, I forget his name, a gentleman from Pathway, and made him know exactly what was going on, but whether that was fed back in – because the relationship between the Post Office and ICL was outwith me. I didn’t have anything to do with that, and sad to say, I wish I had have done.

Ms Kennedy: If we could scroll down again a little bit, and a bit more. It says:

“Mr Edmondson felt that, in general, most of subpostmasters’ difficulties and complaints about the system were being largely ignored.”

Do you feel like your concerns were being largely ignored?

Colin Baker: I felt as though I was being listened to and, after I’d gone out of the room, I’d gone out of the room. That’s what I felt. But I still had to keep on championing the cause. I couldn’t stop. I was on this treadmill and I had to get it done and I had to get it delivered but I had to tell them about all the problems, as well. So I don’t think the Post Office looked endearingly at me at the time, but I had to do what I had to do.

Ms Kennedy: If we could look at page 25. It refers to, if we look down the page, “Mr Peberdy thanked the Council for their information”, and that reflects the concerns that were voiced by the various representatives. It says:

“They were exactly the problems expressed to Dave Miller at their meeting on 11 June.”

We’ve already been to the minutes of that meeting. Do you feel like they were fully raised at the meeting on 11 June?

Colin Baker: Yes, yes, I do. I felt as though we’d done our job with David Miller and Stuart Sweetman. That was the meeting you were referring to, wasn’t it?

Ms Kennedy: Yes.

Colin Baker: Yes, I did.

Ms Kennedy: Turning over the page to page 26, and if we scroll down, it says:

“The General Secretary was asked by Miss Lindon to confirm the rollout would not take place until the problems had been resolved. She said her region was being told August. Mr Baker was emphatic that this would not be permitted to happen and the resolution of problems prior to rollout could be ensured. The Federation had equal standing with the other participants in the Working Group and our views would therefore receive equal consideration.”

Is that right, that you had the power to refuse rollout or you felt you had the power to refuse rollout if the problems weren’t resolved?

Colin Baker: No, I don’t think it was right. I’m reading it, and, well, they are minutes taken at the time, so I can’t argue with that. But I might have been emphatic that we would let everybody know, but I – we, the Federation, didn’t have the power to stop the rollout. We did have the power to tell people in the position of power what the situation was, and we did. But we were a very small cog in a very big wheel, and I did my best.

We did our best to bring this to the attention of the Post Office, but we didn’t deal directly with ICL or anyone else, really. So all we could do was refer back to the Post Office, Dave Miller and all those that were delivering this project to Post Office, because you’ll know there was loads and loads of people delivering the project, and some people making sure the counters were okay, others making sure the screens were – loads of people.

And we told them all what was going on, but it was frustrating to think, at that time, that we wanted to bring it home, but we also wanted correcting things that were going wrong.

Ms Kennedy: So coming back to this minute, I think you say: if the minute says that, then you probably did say it. But would you accept that, in saying that you wouldn’t permit rollout to happen, you were overstating to your members the power that your group had?

Colin Baker: Yes, I would. If that’s what I’d said, I would definitely say that we were overstating our powers.

Ms Kennedy: If we could turn to page 27 – sorry, actually at the bottom of page 26, it says:

“Discussion at length took place between members as to whether a public campaign should be started. Many felt that at action should begin at once [I think ‘action should begin at once’], while others felt that we may lose the goodwill of Government and the Post Office if an offensive was launched immediately. A militant attitude may also jeopardise the Federation’s acceptance as an equal member of the Working Party. In general it was felt that no plans could be made until after the issue of the Government’s White Paper in early July and the contract was signed on the 19th …”

Can you explain what happened at the meeting and why and how it was decided that a public campaign shouldn’t be launched?

Colin Baker: I can’t, actually. I can tell you the experiences at the time, but I can’t remember that particular discussion. We had two campaigns. We marched on Parliament on both. The latter one we had – I can’t remember the dates precisely, we delivered a petition for 4 million signatures to Tony Blair, and these were signatures, not e-signatures: signatures. And that was important – it was important we did that and that was the second one of the two, because the only power we’d got, really, was the number of customers that were coming through our doors.

That was our strength, and so we showed our strength. That’s the way we showed it. We don’t go on strike. There isn’t even a no-strike agreement. It’s just that subpostmasters are shopkeepers as well as subpostmasters, we couldn’t – they wouldn’t close their doors anyway, and why should they?

So that was how we exercised our power and, out of that, come the PIU report; out of that, the Select Committee report. We were pretty influential for being a small cog in a big wheel, we were. But – so militant attitude? Is a march on Parliament of thousands of subpostmasters? It probably is bordering on militance, only like subpostmasters can be militant, of course. So no, we do it when we need to.

Ms Kennedy: Were you telling people at this time they shouldn’t criticise the Horizon System publicly?

Colin Baker: I certainly said that. I don’t know whether it’s this time or not, but I’ve certainly said “Be careful what you say about Horizon outside, because we don’t want to kill it. We want it to happen but we want it to happen right”. So while we, within the Federation, are arguing with the Post Office, arguing with anybody else that will listen to us about the faults that are wrong with it and the difficulty we were having. We still wanted it to happen.

Let me say, I held no torch for Pathway or ICL. We didn’t have any say in who got this contract at all. We were not allowed to go anywhere near it. But, having got it, it’s the best we’d got. We didn’t have anything else so we needed to make it a success. So it’s always a balance. Life’s a balance and that was a balance.

Ms Kennedy: Turning to page 27 and scrolling further down, please, to the National President. It says:

“The National President asked the meeting if everyone was happy that the agreed way forward would be decided on 11th July and that a public campaign would not, for the moment be pursued.”

So the upshot of this meeting was “Let’s wait and see”; is that right?

Colin Baker: It would appear that way, yes. I couldn’t honestly say, but it would appear that way.

Ms Kennedy: Chair, I’m looking at the time. This might be a convenient moment for a short break.

Sir Wyn Williams: Yes. Can I just ask Mr Baker one or two things before we do that, if we’re leaving that document.

On a number of occasions, in answer to counsel’s questions, you’ve said that you raised it with the Post Office, all right? Now I want you to be, if you can, a bit more precise about the personnel that we’re talking about, all right?

Colin Baker: Right.

Sir Wyn Williams: So I understand or I think I understand that some of the occasions you may have raised this would have been with Mr Miller?

Colin Baker: Correct.

Sir Wyn Williams: Was that a direct you-to-Mr Miller sort of thing in a discussion between the two of you?

Colin Baker: Yes, well, I would probably have my colleague John Peberdy with me. I think you’ve got him to come later on.

Sir Wyn Williams: A small group of people where you were discussing these things frankly; is that what I’m to understand?

Colin Baker: Correct, yes. But it didn’t stay at Dave Miller. There was David Mills, who was the Chief Executive at some point, Allan Leighton, who was the Chairman of the Post Office, Stuart Sweetman. It would be anyone. Anyone that we could talk to, we would. If you can hear desperation in my voice now, I’m only echoing what it was like at the time.

Sir Wyn Williams: All right. So do I get the impression that you would raise these issues with as many senior Post Office people as you could?

Colin Baker: Yes, anyone that would listen.

Sir Wyn Williams: Right. Was this done in an arranged meeting or would you pick up the phone, or what are we talking about here?

Colin Baker: Well, anything, any of those. An arranged meeting, picking up the phone, tried to take him to dinner one night and coax him into having a glass of wine and listening to me. Anything that I could to bring it home to the Post Office. And, in fact, there were many, many days in my working life – I’d work Monday to Friday in my office in Shoreham, I’d then jump on a train and go to London to see people there, and then on a Saturday, I would get in my car and drive up to Cumbria, say, and do a dinner-dance there and speak to subpostmasters. That was my life. I was doing nothing else.

Sir Wyn Williams: All right. I think I’ve got the full flavour now.

So yes, let’s have our break. What time shall we recommence?

Ms Kennedy: 11.30?

Sir Wyn Williams: That’s fine. Thank you very much.

Ms Kennedy: Thank you, Chair.

(11.12 am)

(A short break)

(11.30 am)

Ms Kennedy: Hello, Chair.

Sir Wyn Williams: Hello, there.

Ms Kennedy: Restarting with the evidence of Mr Baker. If we could call up NFSP00 – yes, that’s the one. We were looking at this document when we left off but if we could scroll down to the bottom, you left this general Executive Council meeting to go to a working party meeting; is that right?

Colin Baker: Yes.

Ms Kennedy: We see your report at page 27 onwards, and if we turn over to page 28, and scroll down, we can see there that your report says:

“The subject of systems faults was raised and the NFSP were given assurances that there would be software improvements to cure the present difficulties. The Federation were asked for more precise numbers of subpostmasters who were experiencing difficulties as this information would assist them to provide us with the help we require.”

Is that what happened at the meeting?

Colin Baker: Um, that’s what happened, yeah, that’s the report of the meeting we had with them. We also had a meeting with the Post Office about it and we did give them the information yes.

Ms Kennedy: We also have the working party minutes of that meeting, if we can turn up NFSP00000203, and on to the next page. If we look at paragraph 5, we can see there that you say:

“Mr Baker said it was extremely important for the rollout to be absolutely right; with so many planned per week … there would be risk of collapse otherwise.”

It doesn’t record there that you raised issues with software problems. Was that something that was missed off the meeting minute?

Colin Baker: Um, I was making a general point there, as far as I can recall. Well, most certainly it was important, the rollout, you’re absolutely right, and that sentence embraces all aspects of the rollout.

Ms Kennedy: But you’d just left a meeting where you were hearing really distressing things about what subpostmasters were going through.

Colin Baker: Yes.

Ms Kennedy: Did you not think at this meeting you should, front and centre, be saying, “This is terrible, let me tell you about what subpostmasters are going through”?

Colin Baker: I can’t recall whether I said that or not, to be perfectly honest with you. I mean, that’s a minute that obviously somebody has taken, and I don’t know whether that was paraphrasing what I said, or shortening it, or whatever. I don’t know. I can’t remember. But, yes, it was written beginning in my ears. It had been for some time.

Ms Kennedy: Do you feel you got your point across to the Working Group that this was such a serious issue?

Colin Baker: It’s a cautious yes, because getting your point across is one thing, whether anybody takes any notice of it once you’ve got it across, is entirely something else. And I was and remain very concerned that, whilst I was talking to the Working Group and management of the Post Office, Post Office Counters Limited, David Miller, et cetera, the people in the Post Office Investigation Department – whether there was a disconnect between the two, I don’t know.

But the treatment that they were metering out to subpostmasters were not in any way in the spirit of the discussions I was having with them.

Ms Kennedy: You mentioned correspondence with David Miller. On 24 June you sent a letter on to the executive officers, that you received from David Miller. If we can call that up, it’s NFSP00000073, and if we could first look at the letter which is on page 2., and scroll down. This is a letter in response to something that Jean Kendall presented with a list of issues that subpostmasters, as the NFSP saw it, were having.

If we could scroll over on to the third page and scroll down, we can see that David Miller, under “Training”, is saying:

“This is probably our greatest area of concern and is being pursued vigorously with ICL. The areas you have identified such as balancing and cash account are part of the redesign which is currently taking place and is based on subpostmasters’ real experience.”

That would suggest that David Miller saw some of the balancing issues as concerned with training. Is that how you read that?

Colin Baker: Yes.

Ms Kennedy: If we turn over to page 4, we can see balancing has been raised as a separate issue, and it says:

“Your concerns about printing, redeclaration of stocks, and identification of first and second class stamps and postal orders are already in the process of resolution and a software drop in July will deal with them. However, there are issues around the balancing process which are part of the training response and have yet to be satisfactorily addressed by Pathway. Clearly, this is something on which we will base our decisions about acceptance and rollout.”

So there you’re being told there are issues with the software, which will be dealt with by a software release, or there are issues with training, which will be dealt with by training.

If we turn back to page 1, and scroll down, we can see that, in sending this letter on, you say:

“Please see attached a letter from David Miller which goes some way to explain the problems and corrective action which has been taken.”

Did you feel that corrective action was being taken at that action?

Colin Baker: Not at that time, no, but I believed that corrective action would be taken once it’s been reported to David Miller, and his actions should prove so. And, I mean, this actually underlines the point about your earlier question, as to about who did we raise it to and whether they did take any notice of it. Well, I think that statement from David Miller demonstrates that yes, we did, and yes, he did listen.

Ms Kennedy: Yes. You say it goes some way to explain the problems. What did you feel was outstanding? What other things did you want answers on?

Colin Baker: I was desperate to get answers about the treatment that subpostmasters were receiving from the Post Office Investigation Department, when errors had been discovered or reported. They were treated as criminals, and it was offensive to me and I wished that I could do something about it. But whenever I pushed on that door, I was told that the system can’t make errors. You know, “What you put in, you get out”, sort of thing, and I resented that. That’s what I meant by that.

Ms Kennedy: But to be clear, were you raising issues about the system itself or the action that was taken by Post Office against subpostmasters?

Colin Baker: I was referring to the latter of those at the time. Although the system and the hardware and software, and so on, yes, we were deeply concerned about that, as well, we wanted it to be a success, but not at any cost, and one of the costs was the treatment that the people – I’d never call people my members but, in fact, that’s how I felt.

Ms Kennedy: Did you believe the Post Office at this time when it was saying to you it was infallible and Horizon was always right?

Colin Baker: At that point, I really had no choice but to believe them, because they were the masters of it all. I mean, I wasn’t. And I did believe, actually, in the Post Office, up to some point – and I can’t remember precisely what point we’re at, at this stage, but you do – you do, you tend to want to believe them because that’s what you want to hear. You wanted to hear that the system is robust. But, in fact, what subpostmasters were saying to me was “No, it’s not”.

Ms Kennedy: Turning forward to 7 July 1999, it’s NFSP00000200, and if we could up page 2. This is a further meeting of the Horizon System Working Group. And, again, if we look at the contributions you and the NFSP make, if we look at paragraph 4, there’s mention of acceptance testing:

“… Mr Miller said that [this] was going ahead with ICL to a pre-agreed programme. Mr Peberdy asked what defined a ‘high’ category incident. Mr Miller said this would be one which threatened the progress with the project within the agreed timescale. He did not think there would be major problems. Mr Hodgson emphasised the need for regular progress reports.”

At this meeting, you are not making a point of raising the balancing issues that subpostmasters are facing, are you?

Colin Baker: No, I’m not, no. Can I just interject here at this point?

Ms Kennedy: Please.

Colin Baker: It didn’t start with the Big Bang, as I explained before. It was a slow, a gradual increase in the numbers of subpostmasters. And I only get to hear what is fed to me. Now, there’s three classes of subpostmasters, can I put it that way? There are those that are members of the Federation and would refer it to the branch secretary and who we hope would refer it to – there are non-members, who wouldn’t, obviously, because they’re not members. And a third category is those that felt embarrassed that they had losses in their Post Office and weren’t saying anything.

And so we had to amass pass this information the best way we could, and it should be fed back to the Federation headquarters, via the branch secretaries and the Executive Council. If that didn’t happen, we wouldn’t get to know about it. And so, at this point, 1999, it wasn’t the real problem that it is now. And so we were making decisions on what we knew at the time.

Ms Kennedy: If I could refer you to paragraph 9 of that document, which is on the next page. It says:

“Moving on to a report on the government’s intention to establish an interdepartmental working group on POCL funding issues, Mr McCartney said the current speculation in the press on the future of the network was not a helpful background. Mr Baker said that he thought the group should have a role in disseminating good news stories to counter the scaremongering.”

What did you mean by “scaremongering” in this context?

Colin Baker: The people that were saying that it was doomed. I think something like Computer – I hate to say it, Computer Weekly maybe, or something like that, you know, were saying the system is buggered.

Ms Kennedy: But at this stage you’ve got subpostmasters telling you they’re suffering with all these difficulties and you’re proposing to go forward and speak to the press about how positively it’s a good thing.

Colin Baker: Yes.

Ms Kennedy: Is there a tension there?

Colin Baker: Yes, I’ve explained the dilemma that we have. We wanted to be a success, we wanted this to happen because, without it, we’d be dead in the water, but we also wanted to be right. Now, as far as the public were concerned, they didn’t know or we didn’t want them to know that it was perilous and threatened. We wanted them to think it was fine. But we, in our negotiations, wanted to tell the Post Office that we were very worried about it. So there was a tension there between the two, yes, of course, but that’s – you know, that was my job at the time.

Ms Kennedy: Moving on to 10 August 1999, there was a special Horizon meeting in Newcastle. If we turn up NFSP00000237. You went with David Miller of POCL to this meeting, and it records, in the second paragraph, that:

“[Mr Miller] gave a short address, followed by Colin Baker, General Secretary, NFSP. Mr Miller told the meeting that Horizon was formally accepted 2 weeks ago – … trigger points were important.”

I think if we scroll down further, it says:

“The meeting was then opened for subpostmasters to comment on the Horizon Programme and for questions to be asked of POCL and requests made for future actions.”

So, at this stage at this meeting, subpostmasters are being encouraged to share their experiences of the Horizon programme, aren’t they?

Colin Baker: Yes.

Ms Kennedy: If we scroll down again, it says, “General point”:

“Agreed by all on the trial of:

“the stress on the workforce

“the strain on people’s lives and marriages

“lost holidays by some subpostmasters

“the miserly amounts paid by POCL to subpostmasters on trial. (Colin Baker explained that the amounts paid were not negotiated by the Federation but on the Federation’s representatives the amounts had been doubled from the cash to be paid. Subpostmasters told of costs up to £780 in extra wages.

“Of the 44 Horizon offices present in a vote 30 offices said that they suffered stress and only 4 thought payment was sufficient, and they had been in first phrase.”

Was this a difficult meeting for you?

Colin Baker: No, not really. It was, again, part of my technique to put management in front of subpostmasters and let them hear for themselves. So it wasn’t a difficult meeting for me. It might have been difficult for David Miller, but they were doing – subpostmasters were doing what I wanted them to do.

Ms Kennedy: If we turn over the page, it says:

“All offices agreed that a checking system without information having to be removed is essential to the successful use of the system.”

What was that about?

Colin Baker: I really couldn’t tell you. I really don’t know. Sorry about that.

Ms Kennedy: Was it mentioned that it would be helpful to have a way that subpostmasters could check the Horizon data to see if it was correct?

Colin Baker: It might well refer to that but, for the life of me, I can’t remember what that point is.

Ms Kennedy: If we turn to page 4, under “Balancing”:

“Every office complained of System Failure, every balance day need to reboot. POCL have system to know how many reboot without offices informing POCL – but no action taken by POCL to improve situation. Waiting time at Helpline for rebooting instructions make SPMs act on their own.”

This sounds like such quite a dire situation; did it feel that way?

Colin Baker: Yes, for offices involved in that part of the trial, yes, it was. It was dire, and it was all referred to the Post Office.

Ms Kennedy: Did you see that as your role: to allow subpostmasters to say what they wanted to the Post Office (The witness nodded) and then that was the end of your role in respect of these issues?

Colin Baker: No, it wasn’t the end-off my role. My role was ongoing for many years. But, most certainly, it was part of my technique to put subpostmasters in front of managers with us there and let them vent their feelings and let them tell them precisely. Because although I can tell them, it’s nothing like hearing from subpostmasters themselves.

Ms Kennedy: If we look at the very bottom of that page it says:

“All offices agreed there was nothing fundamentally wrong with the system, however they did not want rollout until further improvements had been made.”

Was that something you decided you would keep an eye on, to see whether those improvements were made?

Colin Baker: Yes.

Ms Kennedy: Moving forward in time to 11 October 1999, if we can turn up NFSP00000066, and if we could turn to page 4 and look at paragraph 5. So this is the start of the meeting notes but if we look at page 5, paragraph 5., we can see:

“Mr Miller explained that formal acceptance of the reconfigured Horizon system planned for 18 August had been postponed because of POCL’s concern about training, system stability, data integrity (there had been an unacceptably high level of screen freezes) and effective operation of the helpdesk. The Post Office had accepted the system on 24 September on the basis that effective remedial action had either been completed or was in hand.”

So, at this stage, Mr Miller is flagging up that there are issues with data integrity in the system; is that right?

Colin Baker: Yes.

Ms Kennedy: Did that ring alarm bells with you?

Colin Baker: Um, no more than were already there, to be honest with you. We obviously knew there were problems with it and we wanted him to address it.

Ms Kennedy: But you’ve previously said that you knew that postmasters would be responsible for the losses?

Colin Baker: Yes.

Ms Kennedy: If there’s an issue with data integrity, it logically follows that they could be responsible for losses that didn’t exist, doesn’t it?

Colin Baker: Correct.

Ms Kennedy: So was this now highest on your list of priorities?

Colin Baker: I don’t know. I don’t know what was highest on my priorities at all. I was very concerned about what investigations were going on or lack of it, but I can’t really say whether it was the highest or not.

Ms Kennedy: If we look further down to paragraph 7, scrolling down, it says:

“Mr Deegan asked about the issues of spare capacity and triggers for payment. Mr Miller confirmed that the Post Office were clear that they would be able to use spare capacity on the system (this had previously been an issue of dispute with ICL). The Post Office will pay ICL £60 [million] on 24 October on initial acceptance of the system and will pay ICL a further £80 [million] when they achieve rollout to 1,600 offices, which is planned for around Christmas time. ICL would not receive payment until the target had been reached, though the Post Office was not expecting significant slippage. Mr Baker expressed support for the Post Office’s position – whilst the there was a need for ICL to hit deadlines it was also important for the system to be delivered in full working order. The feedback which Mr Baker had received from NFSP members was intermittent, and not all positive but problems now seemed to be being sorted out and training seemed to have improved.”

Is that an adequate reflection of the feedback that you were receiving from NFSP members at that time?

Colin Baker: Yes, at that time, I’m pretty sure it was.

Ms Kennedy: But it was not all positive. What I’ve just shown you –

Colin Baker: No, it’s definitely not all positive.

Ms Kennedy: Would you agree it was generally quite negative?

Colin Baker: I would agree that it was not all positive. I’m quite sure where we would draw the line there.

Ms Kennedy: You had an opportunity here to cut through and say to the working group “Subpostmasters are finding this really difficult, we don’t think it’s fit for purpose, we’re talking about whether we could go with something completely different”. But you decided not to do that here. Why?

Colin Baker: This was the Horizon Working Group, chaired by government. Those sort of discussions were left for management of the Post Office, and those that were responsible to delivering the programme. This is – you know, we’re talking – we’d go from one – say, “950 post offices automated”, to “Mr Baker expressed support for that position”. Fine. And then it says “It has been received from members that it was not all positive”. Well, you know, that was – that high-level discussion, that was a high-level statement.

Ms Kennedy: With the benefit of hindsight, do you wish that you’d raised this as an issue at that time?

Colin Baker: With what I know now, yes.

Ms Kennedy: Moving forward to 15 November, there’s another note of the Horizon Working Group at NFSP00000063 and, again, given your previous answers – sorry, if we turn to page 5, that’s the start. You don’t raise the issues that subpostmasters were having with the system. Was that, again, because you felt it was inappropriate to do so in this forum?

Colin Baker: The bit I’m looking at talks about the Child Benefit form. Am I missing a little bit?

Ms Kennedy: Yes, sorry, scrolling down. You can see there there’s discussion of the Child Benefit form.

Colin Baker: Yes.

Ms Kennedy: If we go through, let me know if you’d like a moment to read through it fully.

Colin Baker: Which bit?

Ms Kennedy: Well, I’m putting to you, in a way, the note in its entirety. We can have a break for you to read it, but you didn’t feel it appropriate to raise the issues that the subpostmasters were having with the system in this Working Group?

Colin Baker: Not in this Working Group, no. I did raise concerns in this Working Group, and you’ll see at paragraph 5 what I said there. But not this Working Group, no.

Ms Kennedy: At the beginning of January 2000, the Post Office started looking at reforming the policy on losses. If we could turn up NFSP00000361, and if we can blow that up and scroll down, please. In the second paragraph, it says:

“As discussed over the phone the policy should have been amended to cover how we deal with subsequent losses as the current policy could be deemed punitive.”

Do you remember what that current policy was?

Colin Baker: Can I just see who has authored this letter?

Ms Kennedy: If you scroll down, it’s Steve Gibbs?

Colin Baker: Oh, Steve Gibbs, yes, okay. Thank you. The policy was, as I set out earlier, contractual. A subpostmaster is responsible for all losses incurred, including those of his assistants. Now, we’ve identified at this stage that there’s glitches in the system, and I think what this is saying, if I recall it, is that we needed some leniency in this.

We’re not trying to come away from the contractual side of it at all, which is there and, you know, is agreed. But because subpostmasters were now sending their cash accounts off through Horizon and there was some funny stuff happening to it when it got there, we needed another look at this, really. And we needed to engage with Steve Gibbs, and whoever, for a little bit of leniency in it.

But even then, at this stage, we weren’t aware of what’s coming down the track regarding subpostmasters’ losses and how many there were.

Ms Kennedy: If we could turn forward to the 1 February 2000 when you received a letter from Don Grey, that’s NFSP00000348. I think it starts by saying:

“I was sorry to learn from our recent telephone conversation you had received no affirmation of Horizon national rollout from the 24 January.”

Was that right? Were you not informed of that?

Colin Baker: Yes, as far as I can recall.

Ms Kennedy: If we look at the second – sorry, third paragraph, scrolling down, it talks about the system since rollout, and it says:

“Hopefully these improvements will have an evident beneficial effect and tackle the problems identified in the pre-Christmas research that was done via 335 telephone interviews with staff and agents who were involved in Horizon rollout last Autumn. There is some positive feedback from this research ([for example] 36% improvement in ease of balancing; 90% found the system was easy to use; fewer dissatisfied with training than in live trial and 80% satisfaction with the automation programme in general).”

Did you consider that this was an improvement and that improvements were being made throughout this time?

Colin Baker: Yes, I did.

Ms Kennedy: Do you understand what was meant by a 36 per cent improvement in ease of balancing?

Colin Baker: Yeah, I do.

Ms Kennedy: What were they, or what was it?

Colin Baker: It was 36 per cent of offices had experienced an improvement in ease of balancing. Now, for the life of me, I can’t – I don’t know what they thought was easier, but I can only take it on face value that 36 per cent had an easier balance. I can’t know what goes on in every Post Office in the land all the time.

Ms Kennedy: Turning forward to 10 February 2000. If we can pull up NFSP00000261. Scrolling down, this is a letter that you wrote to Executive Officers saying:

“Having been putting pressure on the Automation Director for some information regarding Horizon Rollout, I am sure you will be keen to see a letter which we received which sets out the position following the review held by Post Office Network Unit.

“Hopefully a regular dialogue will soon be established at territorial level in order to assist members to overcome the difficulties that they may well experience as their offices are automated.”

If we turn over the page to page 2 – sorry page 3., and scroll down. This is a letter that was written to you from David Smith, and if we look at the third or fourth paragraph, it says:

“The feedback points in the direction of training, balancing and helpdesks as the major improvement areas with balancing very much the common theme. However, in each of these areas outlets are more or less evenly split between those who think we’ve got it right as opposed to wrong. The trick to be pulled off is to improve matters for those who believe we need to improve without ‘turning off’ those who think we’ve got it right.”

So in terms of balancing being the common theme, in terms of feedback points, was this what you would have expected the feedback to be at this stage of the rollout?

Colin Baker: Yes, I only get bad news from subpostmasters, by the way. They don’t write in and say how lovely things are. So I would not be surprised at that at all.

Ms Kennedy: Were you concerned that the Post Office seemed to repeatedly attribute issues to training, rather than the Horizon program itself?

Colin Baker: Yes, because they were consistently saying, at this stage, that there was nothing with Horizon, it was perfect, you only get out what you put in. So that was why they were focused on training and things. And I do believe that the people that I was dealing with at the time believed that. But I’m not sure now, with the benefit of hindsight, that there were those who knew something was not entirely correct.

Ms Kennedy: Moving forward to 4 May 2000, if we could turn up NFSP00000020 and scroll down. This is a letter that you wrote, a circular to the National Executive Council, and in it you say:

“You may no doubt be aware that there were significant difficulties with Horizon balancing at some Post Offices yesterday. We are waiting for a definitive answer from POCL on the problems encountered. However, what we know so far is that a problem arose last Thursday morning in the uprating of stamps and resulting from poor advice some subpostmasters did not correctly complete the upgrading of stock relation that day. That manifested when they tried to balance yesterday.

“As a result of the difficulties, the system tried to produce a negative balance but Horizon will not allow a negative balance and, therefore, subpostmasters’ balances could not be completed.”

Do you remember this specific incident?

Colin Baker: I do, yes. I remember being at the office late trying to resolve the situation from my position afar, really.

Ms Kennedy: Do you think that it could have been an issue with the Horizon System itself?

Colin Baker: Oh, yes, yes, definitely did.

Ms Kennedy: If we turn over to page –

Colin Baker: Sorry, I think though there was some telephone problems there. I think it was a telephone line that might not have been working. Don’t hold me to that.

Ms Kennedy: If we can turn over to the second page, it says:

“The difficulties with Horizon yesterday, we were advised, was primarily not a systems fault. It was primarily difficulties encountered by subpostmasters last Thursday in understanding the instructions for uprating their postage stock which led to balancing difficulties yesterday.”

When you say “we were advised”, where has that come from?

Colin Baker: The only people it could have come from was Post Office Counters Limited but at what level that would be, I don’t know.

Ms Kennedy: So, even at this stage, the Post Office were saying to you it’s to do with user error rather than an issue with the system?

Colin Baker: Oh yes. Oh yeah. They were adamant that Horizon was perfect, and they were user errors.

Ms Kennedy: When you say “they”, who was it who was saying this to you?

Colin Baker: Well, right up to David Miller, I think.

Ms Kennedy: The last paragraph says:

“They have accepted that there is a clear learning point to make sure instructions are more understandable and they have also accepted a need to review and communicate the difficulties of what they have learned both to those within the Business and to subpostmasters. They are however trying to deal with the problems today and clearly this is the most critical aim for them to focus upon.”

So did you feel that you were forced to accept what the Post Office was saying, that there was no systems error and you had to proceed from there?

Colin Baker: Yes, yes.

Ms Kennedy: At this period of time, you’ve known that there are issues with subpostmasters struggling to balance for over a year. Do you think you could have done more at this stage, when this type of issue arose, to stand up for subpostmasters?

Colin Baker: The – for more than a year comment? Can you just repeat that? I’m not quite –

Ms Kennedy: So I’ve taken you through a number of minutes that show that subpostmasters back to 199 –

Colin Baker: Oh, I see what you mean, yes.

Ms Kennedy: So to ask my question again, did you feel, at this time, it was time to escalate this or to do more to try to say to the Post Office, “Look, these issues have been going on for over a year, we need to do something about the system?”

Colin Baker: Yes. Yes, I did.

Ms Kennedy: If we could move to 5 October, you received a circular from POL. If we could turn up NFSP00000406.

Colin Baker: Can I see who has signed it, please?

Ms Kennedy: Yes, I was going to ask. If we turn over the page.

Colin Baker: Okay.

Ms Kennedy: I was going to ask you if you remember this or who sent it to you. Because it’s not signed.

Colin Baker: I don’t, actually. I don’t actually remember it. No, I don’t, I’m sorry to say.

Ms Kennedy: Please don’t apologise. We can see that it’s from the Post Office, if we scroll back to the first page.

Colin Baker: Yes, indeed.

Ms Kennedy: What I wanted to ask you about, so this is generally headed that it’s about “National Rollout Progress”?

Colin Baker: Mm-hm.

Ms Kennedy: But if we turn on to the second page, and we scroll down, the “Cash Account” section, which is second from the bottom, “Cash Accounts”:

“Since the introduction of Horizon there has been a significant reduction in amounts held in unclaimed payments/uncharged receipts. The same cannot be said of authorised shortages, and internal processes, including additional help to specific outlets, had been improved. The level of errors on Horizon continues to fall but has still not returned to pre-Horizon levels and analysis of root causes has led to a number of remedial actions being taken.”

So in October 2000, the Post Office is saying that there are higher levels of errors on Horizon than there were before. Again, did this concern you?

Colin Baker: It didn’t surprise me. Yes, I was concerned about the whole thing at this stage, but it didn’t surprise me because, as we’ve discovered before, there was – some subpostmasters weren’t showing all the errors. Some were. And with Horizon, of course, they had to show the errors. And so I would not have been surprised to have seen that, although I don’t remember seeing it, of course.

Ms Kennedy: Turning on to November 2000, if we could turn up NFSP00000153. This is a circular to the National Executive Council about ghost entries on giro daily reports. Do you remember this incident?

Colin Baker: Yes.

Ms Kennedy: If we turn over the page to page 2, and if we look at that main text in the middle of the box, it says:

“There have been occasions where Girobank transfers entered onto CSR+ Horizon terminals may not be visible on the office copy in the Horizon daily records. The transaction will, however, be included in the grand total value and volume reported to the cash account. In addition, the individual totals on one or more Horizon daily records may be wrong. This fault is due to be fixed in December.”

So this is the Post Office telling you that Horizon records may not be correct?

Colin Baker: Yes.

Ms Kennedy: Again, did this surprise you?

Colin Baker: Err … yes, I think it did surprise me, at the time. This was handled by my assistant, Kevin – very good – and it did surprise me. It surprised me because I saw Post Office admitting now that there’s something not quite right with the transaction record. That surprised me, but I was anxious to see a resolution to it.

Ms Kennedy: At this stage, were you aware of the Post Office prosecuting any of your members on the basis of Horizon data?

Colin Baker: What’s the date of this one?

Ms Kennedy: So this November 2000.

Colin Baker: I was not aware, then, of prosecutions. If there were any, I don’t think I heard about it, really.

Ms Kennedy: Turning forward to the beginning of 2001, and if we could call up NFSP00000557, so this is the National Executive Council meeting, and if we turn to page 9 and scroll down please, under “Horizon Implementation” it says:

“Mr Peberdy reported that he thought that Don Grey did his best to sort out problems with Horizon.”

Did you agree with that? Did you feel that Don Grey did a good job of sorting out the issues with the Horizon?

Colin Baker: I was taking advice on it from Mr Peberdy.

Ms Kennedy: Is that something we should ask him about?

Colin Baker: Yes, I think so.

Ms Kennedy: If we turn over to page 10, which is the next – and then (f), thank you. Do you remember what Horizon polling problems were?

Colin Baker: No, I don’t. I’m just reading on a bit. I would imagine “polling” meant drawing information from post offices. I don’t know for sure. Sorry, can’t help you with that one.

Ms Kennedy: Thank you. Then moving forward again to March 2001, if we can call up NFSP00000513 and if we could turn to page 15. Scrolling down, please. Thank you. This again concerns Horizon polling problems. Does any of this refresh your memory?

Colin Baker: I just have to take a minute to –

Ms Kennedy: No, please do. Take your time.

Colin Baker: I’m refreshing my memory and I can’t say that I’ve got a vivid memory of this but the second paragraph there, about the Horizon problems, the stories that were told, I mean, that’s all very familiar to me.

Ms Kennedy: So picking up on that second paragraph about the money held in the suspense account:

“He had been led to understand that there was 10 million in a suspense account now, as opposed to 2 million, 18 months ago.”

Colin Baker: Mm-hm.

Ms Kennedy: Was that something you were aware of at the time?

Colin Baker: No, it wasn’t but I was aware of it after John had told me.

Ms Kennedy: Was it concerning to you?

Colin Baker: Yes, I wondered how that happened, why it should be. Because, as I go back, the contract says that the subpostmaster makes good losses at the time. So is this money that the subpostmaster put in that’s in a suspense account? Or is this money that it – I’m asking you the question, you don’t know and I don’t know – or whether it’s a suspense account where subpostmasters should have put £10 million in and haven’t done. I don’t know.

Ms Kennedy: If we could turn over the page to page 16 we can see Mr Walsh asks a question:

“Mr Walsh asked a question about losses and gains policy, whose responsibility was it when a claim for money was sent out, whether it was put in as per the loss and gains policy or whether the total amount should be asked for. When Post Office Network requested repayment of money, they would know in the losses and gains policy they should only be asking for 25% plus £2,000 if the loss was £10,000. Why did they not ask for that immediately.”

If we scroll down, Mr Morgan Jones highlighted a particular case, which was a hostage situation, and the subpostmaster was asked to pay 53,000 which was now being reduced to 5,250:

“At the interview for the appeal the subpostmaster was asked if he was insured and gave Mr Morgan Jones a great deal of concern. Eagle Star provided a 5,000 cover under certain circumstances.”

So at this stage, members are starting to raise concerns about people being asked to repay quite large sums of money on the basis of Horizon data; is that right?

Colin Baker: I don’t know whether it was Horizon data, was it? Was it highlighted particularly, as well? Hostage situation? Um, I’m not sure whether that was due because of Horizon, or whether it was due to the hostage situation, whether the subpostmaster actually gave – was taken hostage and gave the money out. I don’t know. I honestly don’t know.

Ms Kennedy: Turning forward, then, to 2003. If we could turn to NFSP00000411. This is a letter that you received in 2003. If we could scroll down and on to the second page. Scroll down, please. You received a letter from a firm of solicitors saying:

“We have been instructed in connection with recovery of a purported late account for a local Post Office. The postmaster, however, is adamant that she did not take that money. There is approximately 3,000 in dispute. Our client vehemently believes that there was a ‘glitch’ with the computer system that night which cannot now be located. We are wondering whether you’re aware of any additional ‘glitches’ with such systems.”

If we could turn back to the first page, we can see your response, scrolling down. You said:

“I can advise that at the time of migration from the manual system to the computerised one, a number of subpostmasters complained of errors that had been created by the system. We have no way here of knowing whether such errors were as a result of the computer system and, therefore, the matter was raised with Post Office Limited. We are advised that all cases were examined and some were found to be computer glitches whilst others were zero.”

So that was your response when this was raised in 2003, as a potential cause of a shortfall; is that right?

Colin Baker: Well, there’s another paragraph to follow that one, where I advised that the most productive way forward to proceed would be for the client to request an investigation. As to the system:

“… it should be able to identify all transactions undertaken. If your client is a member of our organisation, we will be pleased to request such an investigation.”

So it wasn’t just left there. I actually did suggest an action.

Ms Kennedy: Did you remember receiving this letter?

Colin Baker: I do, yes. Yes.

Ms Kennedy: Did you think at the time that this might have been a manifestation of the issues that we have discussed today?

Colin Baker: Yes, I thought it was a distinct possibility, yes.

Ms Kennedy: Do you think that you deferred too much to the Post Office?

Colin Baker: In as much as I was asking for an investigation into it, we – the National Federation of SubPostmasters couldn’t investigate into it because we weren’t – we don’t know the other end of the Horizon System and what was happening there. Only the Post Office and ICL Pathway could have undertaken that sort of investigation, but we did urge a member – I’m assuming a member – to go down that route. And what I’ve said in the final paragraph, “We were pleased to request such an investigation”.

I don’t think we heard anything from that.

Ms Kennedy: Mr Baker, I don’t have any further questions.

Chair, do you have any questions for Mr Baker at this stage?

Questioned by Sir Wyn Williams

Sir Wyn Williams: There’s just one, if I may. It arises out of paragraph 20 of Mr Baker’s witness statement. So if that could be put on the screen and Ms Kennedy, if you could give the number.

Ms Kennedy: Yes. It is WITN– oh, there it is. WITN03780100, just for the transcript.

Sir Wyn Williams: If you’d look at paragraph 20, please –

Colin Baker: Certainly.

Sir Wyn Williams: – which is page 7 of 10 in the witness statement.

Colin Baker: Thank you, paragraph –

Sir Wyn Williams: That’s it. This is all part of a narrative which you’ve been taken through by counsel –

Colin Baker: Yes.

Sir Wyn Williams: – as to the various things that were happening, essentially from 1999 onwards, and I read that paragraph as having occurred sometime in the year 2000, all right? So would you just read that to yourself –

Colin Baker: Yes.

Sir Wyn Williams: – and see if I’ve got that right, because it’s talking about postponement of acceptance of the system, et cetera, which would seem to mean that it was either late ‘99 or 2000.

Colin Baker: Yes, that’s correct, and that’s underscored, I think, by the paragraph, “Complaints at that time were mainly about training and delays in receiving help from the helpline”.

That was the feeling that we had at the time, yes. That’s about right.

Sir Wyn Williams: What I want to ask you about are two names about six lines down. First of all, is “David Mills” correct or should it be “David Miller”.

Colin Baker: No, that’s David Mills.

Sir Wyn Williams: It is David Mills, that’s fine.

Colin Baker: He was David Miller’s boss.

Sir Wyn Williams: Then, for the first time in this phase, the name “Paula Vennells” has cropped up.

Colin Baker: Yes, indeed.

Sir Wyn Williams: So could you explain to me your understanding of what role Ms Vennells was playing in 1999/2000?

Colin Baker: I would. I think she was the managing director of Post Office Counters Limited.

Sir Wyn Williams: Right, thank you.

Colin Baker: So she was a pretty high up person.

Sir Wyn Williams: Are you saying in that, where you use the phrase “We continued to raise them with David Mills and Ms Vennells”, that you personally, either in writing or orally, discussed these issues with Ms Vennells?

Colin Baker: Yes.

Sir Wyn Williams: Right. All right, thank you very much.

Colin Baker: Yes, I did.

Ms Kennedy: Chair, we’ve given permission for Mr Stein and Ms Page to ask questions.

Sir Wyn Williams: Yes, certainly, yes.

Questioned by Mr Stein

Mr Stein: Mr Baker, good afternoon. My name is Sam Stein, I represent a very large number of subpostmasters, mistresses and managers. I’m going to take you directly, please, to a document with the reference POL00028530.

Now, Mr Baker, in your evidence you have stressed that, without automation – I quote from you, “without account automation, we would be doomed. I’m sure it was lifesaving for us”.

That appears to have been an attitude that you’ve expressed throughout your evidence. Now, I assume from what you’re saying in your evidence that you mean that without automation, or your perception of what automation can do, then many, many branch offices of the Post Office would be closed?

Colin Baker: Many sub post offices, yes.

Mr Stein: Yes, okay.

Colin Baker: Eventually, closed. I didn’t think the axe would fall instantly.

Mr Stein: So that was the threat you were working under and seeking to avoid; is that correct?

Colin Baker: Threat? Yes, yes, I would concede that, although I don’t like the word threat, to be honest.

Mr Stein: Let’s have a look at this document, then. This is in November 1998, as you can see. “Restricted policy and Commercial, Department for Trade and Industry”. It’s for the attention of Jonathan Evans, from Isabel Anderson, Postal Services Directorate. Can we go to Relativity page 2, please. We’ll see there that, under the heading “Restricted policy and commercial”, this is the draft as at 6.30 pm on 13 November 1998, “BA/POCL Automation Project”. So this goes back to those particular days, as you can see, that it included, at that particular point, BA, and then it’s an interdepartmental working group report to ministers, so we can see what this is about.

Colin Baker: Yes.

Mr Stein: This is a briefing or a report to ministers in relation to matters as of that time, okay?

Then if we can now move, please, to the bottom of page 7 of 30. At this point in the document, the document is going through various options, so if you look at “Recap on the options”, the impact of each option on the Benefits Agency and the Post Office are driven by the following key factors. So it’s looking at different options that are available for the possible continuation of the project. Then under “Managing the Changes to the Post Office Network”:

“The response of the Post Office under each option and in particular how any changes to the network will be managed, would be an important factor in any decision on the way forward. There are differences of view between the parties on …”

Then if we go over the page, please:

“… the ability of the Post Office to manage changes to the network under each scenario.”

Can we then concentrate, please, on “Key issues will be”, and the first one is how to maximise POCL’s existing customer base, as benefit payment switches to ACT. Second one is how to maintain relations with existing clients. Then the third one, please, and if we can highlight the third bullet point “How to ensure”, that one, please – thank you:

“How to ensure that the subpostmasters (private agents who run the majority of the Post Office Network) perceive that Post Office business can provide a viable future and do not voluntarily exit the market (reducing the ability of the Post Office to manage network closures and migrate business to other offices)?”

Colin Baker: I see that, yes.

Mr Stein: Okay. If we can go down to paragraph 21, and again highlight paragraph 21 this time, please. So paragraph 21 says:

“Under all options the Post Office will be seeking to manage a reshaping of the network, against a background of commitment to a nationwide network of post offices.”

I’m only pausing, Mr Baker, so you can make sure –

Colin Baker: No, okay, I was following you.

Mr Stein: I understand, but just so that you’re comfortable with having your glass of water.

Colin Baker: Okay.

Mr Stein: “Under all options the Post Office will be seeking to manage a reshaping of the network, against a background of commitment to a nationwide network of post offices. Their objective is to retain the current levels of access, particularly in rural areas, but to reduce over-provision in some urban and suburban areas, replacing some physical offices with electronic access points. Current trends would, in any case, see a reduction in the rural network by some 200 offices each year, and a gradual shift to ACT-based methods of payment over time (by 2009/10 almost 50% of claimants are expected to have switched to ACT).

“Compared to the current network of 19,000 offices, POCL believe that their vision for the future could be served by a network consisting of around 11,000-13,000 full service offices supplemented by 5,000-10,000 electronic access points, many of which could continue to be sited in existing Post Offices …”

So in November 1998 were you aware of this vision that the Post Office had regarding a substantial closure?

Colin Baker: No, I wasn’t. And I would have been surprised if they’d have shared it with me, to be honest.

Mr Stein: Do you see that, under the third bullet point, what’s being set out here in the briefing to ministers is that, bearing in mind what you can see in paragraph 21, that what was being thought to be appropriate was to “ensure that subpostmasters, (private agents who run the majority of the Post Office Network) perceive that Post Office business can provide a viable future”.

You’re an ex-subpostmaster yourself, I don’t know how you funded your own Post Office branch, but you’ll understand that many people had loans –

Colin Baker: Oh, I had a loan.

Mr Stein: – they invested their own funds, savings into it.

Colin Baker: Yes.

Mr Stein: They did that in the hope that they would have a settled provision for the future?

Colin Baker: That’s correct.

Mr Stein: They hoped that the money from the Post Office and the money they’d get from any associated other business that they’d run alongside the Post Office would provide them with a reasonable income and, hopefully, therefore, provide them with an income to satisfy their children’s needs, their own needs, and indeed retire in the future?

Colin Baker: Yes.

Mr Stein: Okay. So presumably what you were doing, Mr Baker, was that you were seeing automation as being, in your mind, the best way to preserve this big network of 18,000/19,000 offices –

Colin Baker: Yes indeed, yes indeed.

Mr Stein: – precisely for the reasons that I’ve just gone through, which is that these are hardworking people who had put in a lot of time and effort –

Colin Baker: We were already doing a lot of other things as well, regarding compensation of office agreement with the Post Office Limited, so that should the axe fall on any particular sub post office, that subpostmaster could be compensated. That was a negotiation by the National Federation of SubPostmasters, one of which I’m proud, because there was something there for the subpostmaster should the axe fall, because the subpostmasters’ contract is in the gift of the Post Office. And, you know, we’ve got to prepare our members for should that happen.

Now, with that compensation agreement, some subpostmasters volunteered closure. It was worth their while to go, and – because maybe they could see the writing on the wall. But that is most definitely – it’s impeccable, what you’ve just read out there. That’s true. But we had to seek to address it, and that’s something else which we would do.

Mr Stein: You say it’s true but were you aware of this vision? Did you understand that –

Colin Baker: I wasn’t aware of the vision. No, I was aware that there’s plenty of facts in there but I was not aware that that was the Post Office vision. No.

Mr Stein: What would you have done –

Colin Baker: Um –

Mr Stein: – if you knew this?

Colin Baker: Well, what I would have done and what I did was champion something called the … I’ve left my papers behind – it was a Government report, of which we had a great say in it, and the Prime Minister, Tony Blair at the time, came out in favour of it, and it stressed there what we should do. I haven’t got it with me. It was the PIU report.

Have you read it, sir? Can I recommend it to you. Thank you.

Mr Stein: Do you feel as though you were misled by the Post Office if this was what they had in mind, this intention to cut, by well over a third, the Post Office in 1998 –

Colin Baker: I don’t think I was misled because –

Mr Stein: – using the very system of automation that, in fact, you championed. Do you consider that you were misled by the Post Office?

Colin Baker: No, sir.

Mr Stein: Why not –

Colin Baker: I consider –

Mr Stein: – because, here you are, championing the automation of the project and, in fact, they intended it to cut massively?

Colin Baker: But they didn’t. Influences were at work, not least of those of the National Federation of SubPostmasters, who got this PIU report – and I too recommend you read it – then you might reconsider your question to me. You might.

Mr Stein: Mr Baker, the position of the National Federation of SubPostmasters appears to have been to essentially attempt to work with the Post Office to get the automation set out within all of the Post Office branches, yes?

Colin Baker: That is absolutely correct sir, yes.

Mr Stein: Did that mean that you had to keep facts back from your own membership?

Colin Baker: No.

Mr Stein: No? So you adequately told them, did you, at all times, about the problems that you were aware of?

Colin Baker: Yes. In fact, you’ve probably got all the evidence that I’ve got, two folders full of it, meetings with the Executive Council, meetings with the branches. In addition to that, we had a subpostmasters journal, The SubPostmaster it was called, monthly, and there was to and fro exchange of information, and I didn’t keep anything, particularly the naughty stories, I didn’t keep them from you at all. I believed that because they got a lot of money invested in it, that they deserved to know which way was up, personally.

Mr Stein: All right, Mr Baker. I’ll leave it there. You may have been told by the Inquiry that you’re expected to return at a later stage –

Colin Baker: No, I haven’t been told that. I look forward to it.

Mr Stein: You’re expected to return at a later stage in the hearings, Mr Baker, and we look forward to seeing you then.

Colin Baker: Thank you very much indeed.

Questioned by Ms Page

Ms Page: Mr Baker, I am Flora Page, I’m also representing a number of subpostmasters in the proceedings.

Colin Baker: Nice to meet you.

Ms Page: Can I just clear up something to start off with, which I expect is just that somebody else bears your name. I just want to clear this up.

Colin Baker: Okay.

Ms Page: A “Colin Baker” appears occasionally in technical fault documents on ICL. You never would have seen those, would you?

Colin Baker: I would be the last people to be pointing faults to ICL, to be honest with you.

Ms Page: No, thank you. That’s, just, as I say, to clear that up.

Can I then, please, look at a slightly different bit of a document we’ve already looked at, which is NFSP00000203, and this is the report of the Horizon Working Group meeting, which was interjected into the middle of your NFSP meeting.

Colin Baker: Okay, yes.

Ms Page: As I understand it, you were at your NFSP meeting, you went to the Working Group, and then you returned. If we go down, please, to paragraph 6, I think it is.

Colin Baker: Thank you.

Ms Page: Yes, actually, sorry. I do apologise. If we start off, first of all, with paragraph 4. You’ve looked at your interjection in paragraph 5 but I just want to look at what’s said either side of your interjection. We’ve looked at the fact that Ms Rego had pointed out some emerging issues around acceptance and, over the page, she says – or at least I suspect it was her who says:

“There was a need to establish exactly what it was POCL was buying. ICL have not allowed access to POCL so that they could determine this and have insisted that this is not a contractual issue. They have, however, indicated that they are willing to talk informally. POCL consider the issue to be too important to the commercial future prospects of the project to rest on a purely informal and unenforceable indication.”

That, no doubt, is what you were reacting to when you said it was extremely important for the rollout to be absolutely right. So, in effect, what they’re saying here at this quite important juncture, after the Post Office has relatively recently gone into the bilateral agreement, they’re saying they don’t really know what they’re buying and that ICL aren’t giving them access to it.

Colin Baker: Yeah.

Ms Page: So, no doubt you’re saying, “Well, hang on a minute, we need to know what this is all about before it’s rolled out”.

What I want to look at is the next paragraph where Mr McCartney, the Minister of State, said that rollout was crucial. He was emphatically not prepared to accept getting away from the commitment to 2001:

“Slippage would make the wider discussions on Government usage of the network impossible. If there were problems with software, training, etc, then these should have been flagged up earlier and must now be resolved in a way that enabled the 2001 timetable to be recovered.”

Now, was that really “automation at any price”, there?

Colin Baker: Well, you’re quoting Mr McCartney’s words to me, and I suppose it could be interpreted as that, yes. What – my bit about – my comments relating to “automation at any price” was the way in which subpostmasters were browbeaten and treated. That’s the price I found unacceptable.

Ms Page: All right, well –

Colin Baker: But we can talk about getting the bits and bobs right, you know, the software and hardware and position on the counters, and the helpline and – that was work in progress all the time. But the bit that I found totally unacceptable was that: the treatment of subpostmasters.

Ms Page: All right, well, we’ll come back to that. But what Mr McCartney here is saying is that, in effect, this is going to be pushed through no matter what, isn’t he: 2001 is happening?

Colin Baker: Yeah, that’s what he’s saying there, yeah. Whether that was fact or not, I don’t know, because we – you know, we got told some stuff.

Ms Page: Well, when you then go back to your meeting – and so if we can now have a look, again, at NFSP00000203, and if we go down to page 23, I think it is.

Ms Kennedy: I’m being told that’s the same document as earlier.

Ms Page: I’m so sorry, I’ve cited the same reference. Hang on for a moment.

Sorry, it’s NFSP00000471, and it’s page 29, in fact, that I wanted to zoom in on. In that large paragraph in the bottom half of the page, about partway through, this appears to be you reporting back on your view on Mr McCartney. It tells us that Mr McCartney appeared to be wholeheartedly in favour of preserving and improving the Post Office system. That’s sort of just over halfway down the big paragraph; do you see that?

Colin Baker: Yes.

Ms Page: “It was felt by Mr Peberdy and Mr Baker that he would be a valuable ally in the struggle for replacement of the lost benefits work, with other government usage of post offices.”

Colin Baker: Yes.

Ms Page: “We hope that he will remain in the job long enough to see the project through to fruition.”

Colin Baker: Here we go.

Ms Page: So, in other words, your take on Mr McCartney was his determination to see this through, even if there were software problems, was a good thing?

Colin Baker: Well, it was wider than that, if I could put words into Mr McCartney’s mouth. It was wider than that, and the references to utilising the network for other things other than Benefits Agency payments, because by then we knew that the axe was going to fall on Benefits Agency payments. So what Ian McCartney was saying, and whether it’s all documented there I couldn’t say, but he was onside with the other things that subpostmasters could do.

And some of the things in the PIU report was subpostmasters, with the use of automation, could be general practitioners for government. A one-stop shop to go and access government – motor vehicle licences, forms, that sort of thing, you could get from the local Post Office. And if you could imagine the vision, certainly the vision I had, and I think it was shared with many people – was there was this ubiquitous network standing there ready to enable people to go and interrogate government, to – we could give them all – we could give them bus timetables, we could do all sorts of things because we’d got the automation there to do it with.

That was the vision, and I think that Ian McCartney actually shared that view, not the precise detail, but shared the view that there were more things that the Post Office could do.

Ms Page: If we could just take the document down for a moment. So what I think you’re saying, and you’d tell me if I’m wrong, is that there were two sides to what Mr McCartney was saying. On the one hand, he wanted to get this done absolutely on time?

Colin Baker: Mm-hm.

Ms Page: He had no hesitation in saying “Software problems, I don’t mind about that, I want to get this rolled out”.

Colin Baker: Yes.

Ms Page: But, on the plus side, he had this vision for what Horizon was going to be able to do and, ultimately, perhaps that’s what you’re talking about when you referred to the PIU report in –

Colin Baker: That’s exactly what I was –

Ms Page: That’s where that was all –

Colin Baker: Have you read it, madam?

Ms Page: I have.

Colin Baker: Good, innit?

Ms Page: I’ll come back to that perhaps, as well, if I have time, but the point is that, at this juncture, despite what you’ve told us was ringing in your ears about the trauma of people’s experiences with the software –

Colin Baker: Mm-hm.

Ms Page: – you were prepared to see him as an ally with that software rolling out, no matter what, because of what you could get out of it, what you saw you were able to get out of it in the future?

Colin Baker: I think that’s an extremely black and white view of the world – of my world, as it was at the time. I go back to saying that we saw automation of post office counters as the answer to our problems, okay? Not Pathway, not ICL. Automation of post office counters. And it was essential that that came along because of all the other things it brought with it. Ian McCartney seemed to have a grasp of that.

His job was to get the thing delivered. That wasn’t my job. That was his job, to get it delivered. And he’s making the statements that he makes because that’s his job. My job is to protect and defend the interests of subpostmasters and, by doing that, I’m also thinking about their business and their livelihoods and all that sort of thing as well. So, to some extent, we come from different positions, but it’s as well that you understand other people’s opinions and what they are about before you can actually get a good negotiation with them.

So, yeah, he seemed to be saying the right words, and I’m sure that he was saying those words because somebody had got a knife in his back saying, “You’d better deliver it or not”.

Ms Page: All right. Well, if I may then, there’s another document I’d like to put to you, which is CBO00100006_074.

Colin Baker: Yes.

Ms Page: If we could perhaps zoom in a bit so it’s a bit easier for us to read.

Colin Baker: Thank you.

Ms Page: What we can see is that this is a letter to the Chancellor and, if we go down to the end – I think we’re nearly there – it’s from Mr Byers. What it tells us – sorry, if you don’t mind, if we go back to the beginning – is that in July 2000 Mr Byers was rather pleased that he’d been able to keep you on board. This is in relation to the PIU report, and he says at the end of that top paragraph:

“We achieved a key objective of securing public support from Colin Baker.”

Next paragraph:

“Much remains to be done, however. There has been a good deal of criticism of Colin’s stance from elements within the NFSP who believe that the commitments made in our response to the PIU report lack sufficient substance (and this will be a recurring theme until we’re able to attach [pound signs, I take it or million pound signs], to specific funding packages when we announce SR2000, about which I’ve written about separately). Unless we are able to show regular and tangible progress with the implementation of the package, there is a real risk that Colin will be unable to hold his line with his Executive Council and the wider membership.

“A resumption of the Federation’s campaign, accompanied by accusations that the Government has shown itself to be cynical and duplicitous on this issue would be politically disastrous and I therefore look to EA colleagues to cooperate fully in taking forward urgently the various elements of the package.”

He says:

“Nowhere is this more true than in respect of the universal bank”, and he goes on to talk about how important that particular element of it was.

So is that right: was there a real difficulty with holding the line, as it were?

Colin Baker: One of the tools in the General Secretary’s bag is to threaten the Government with dire action from his members.

Ms Page: Certainly.

Colin Baker: “I can’t control the member’s, Governor, you know, they’ll do what they want to do”.

Ms Page: So, to some extent, this was a little bit of negotiation, was it, with the Government?

Colin Baker: It was precisely that, yes.

Ms Page: All right. So would you say you were carrying, reasonably easily, the NFSP with you?

Colin Baker: No, I wouldn’t say I was carrying them easily. There was one or two of them that would call for my resignation, and other things. Horrible stuff. It wasn’t the easiest of rides. But I always had my eye on the goal, and that goal was a network of automated post offices. And can I just remind – if you don’t mind – saying that we set out to get counter automation for post offices and, at the end of it, every –

Ms Page: Can I interrupt to say the document can come down, so that the Chair can see you.

Colin Baker: Oh right. Hello.

Ms Page: Please do go on. I’m so sorry.

Colin Baker: Okay. I’m proud of the results of the negotiations that we carried through all that period. Not every post office is automated now but every single counter position in every Post Office, at no cost to the subpostmasters, no cost to our members. So I don’t know how you measure success, but I think that was a successful period. Now, in part, there were some subpostmasters that want to nibble at my ankles, that’s fair game. I’ve always said the tallest tree gets most of the wind and I got a fair bit of it.

Ms Page: The point is, isn’t it, that you achieved your goal of automating the Post Office, but along side that, we know that between 2000 and 2014, 736 subpostmasters were prosecuted on the basis of Horizon evidence, or at least 736 – that’s a figure that has been put about. What did your organisation do to join the dots and recognise that this unlikely crime wave was actually a result of implementing Horizon?

Colin Baker: When I was General Secretary of the organisation, we were consistently beating a path to the Post Office’s door, consistently. And it included up to and including the counter losses. But I’ve said before, the – it was a slow roll, these Horizon losses. And I retired in 2007, so I can’t say anything about what happened after then, forgive me. But I think we did our absolute utmost – I don’t know how many of the 700 or so were pre-2007 or post-2007. I’ve not seen that information.

I don’t know whether all or any were members of the Federation. I don’t know whether all or any actually referred it to the Federation. So it’s not a question that I would attempt to answer, and I would venture to suggest it’s not a question you should attempt to ask.

Ms Page: Well, we may come back to that, Mr Baker.

Colin Baker: Okay.

Ms Page: Thank you. Those are the question is have for now.

Sir Wyn Williams: Thank you very much, Mr Baker, for taking the trouble to write a witness statement but perhaps, more importantly, taking the trouble to answer very many questions this morning.

Ms Kennedy: Chair, I’m so sorry, we also have questions from Ms Watt from the NFSP.

Sir Wyn Williams: Right.

Questioned by Ms Watt

Ms Watt: Thank you, Chair. Just a couple of questions arising from the evidence that has been given. Thank you very much for allowing these to be asked.

Mr Baker, you gave evidence earlier about, in the pre-Horizon situation, of how discrepancies or errors could arise on balancing, and I just wondered if, in the wider context of how such errors, as you described occurring, of when we hear about the post-Horizon errors that you were asked about, is every error that arose there as a result of Horizon, as far as you can tell?

Colin Baker: I couldn’t possibly tell. I wouldn’t know what was an Horizon error and what wasn’t, unless I knew exactly what was going on in that particular Post Office. And I’m reliant, as I hope, anyway, you can grasp – I’m reliant on the information that’s fed to me, and then I have to test that information. So if a non-member tried – if it was a non-Horizon error, that I think we’ve already touched on one today, where it was a hostage situation. You know, so you’ve got to analyse them all. But no, absolutely not.

Ms Watt: You talked about hindsight in your evidence –

Colin Baker: Yes, indeed.

Ms Watt: – and what you know now. But, at the time, were you working on this – for instance, the Horizon Working Group and in any other situations, with other representative bodies, those who represented other employees or managers, as well as the NFSP, and how were you working with them? What were they doing?

Colin Baker: I don’t know what they were doing offline, I’m sure, but in the meetings, some were quite vocal. Some were not so vocal. I think I was an irritant, maybe the grain of sand in the oyster, perhaps. I get the impression – I mean, there was a vast array of people, there were ministers and all sorts – I think probably I was one of the most vocal but there were others. I think – yeah, I think I was one of the most vocal.

Ms Watt: Can you recall who else was involved?

Colin Baker: I think the General Secretary of the CWU was involved and he had a word or two to say. And I don’t think the Post Office was saying much at that time, but I don’t know what meetings were had before or after, you see. So, again, it’s a wise man who knows what he doesn’t know.

Ms Watt: Just staying with the theme of hindsight, thinking about that, do you think that you or these other organisations, based on what you knew at the time could have foreseen what was going to happen?

Colin Baker: No, we couldn’t foresee that. I mean, we were focused – as we’ve said, in the meeting, we were focused really on the Horizon platform and losses, counter losses, at that time, stood outside of that, really. I mean, they only came flowing in when we realised just how many there were, and that was post-those meetings that we were having. So no, in no way could we envisage that.

Ms Watt: Just to sum up from your evidence, in the light of all that you’ve said and been asked and what you now know, in what way do you feel, in your time as General Secretary, that you and the NFSP represented all the interests of your members in relation to the Horizon scheme.

Colin Baker: Yes, I do, in fact, we were championing counter automation, not only for subpostmasters but the whole network, the CWU and CMA and people of that nature. So, yeah I think we were all right. I think we did okay. Thank you.

Ms Watt: Thank you. No further questions.

Ms Kennedy: Thank you. Chair, I have one clarificatory re-examination question.

Sir Wyn Williams: Of course.

Further Questioned by Ms Kennedy

Ms Kennedy: When you were asked questions by the Chair a moment ago, about paragraph 20 of your witness statement, David Mills and Paula Vennells, you were asked about whether you were speaking to Ms Vennells in the year 2000. Ms Vennells didn’t start at the Post Office until 2007.

Colin Baker: Yes.

Ms Kennedy: So you wouldn’t have been speaking to her in the year 2000 about these issues?

Colin Baker: No, that’s true. Thank you for that. Yeah, it would be who Paula Vennells replaced, which I think was David Miller.

Ms Kennedy: Thank you.

Colin Baker: But David Mills was the – I think he was Chief Executive or Chairman or something. He was pretty high up, David Mills, yeah.

Ms Kennedy: Thank you, chair. I have no further questions.

Sir Wyn Williams: I launched into a thanks to you, Mr Baker, when I was told very politely that the session hadn’t ended. So I think it has ended now, but my thanks remains the same. Thank you very much for coming.

Colin Baker: Thank you, Mr Chairman.

And all the participants in this, I wish you every success with this Inquiry. It needed doing, and I wish you every success. Thank you.

Sir Wyn Williams: Thank you.

Are we going to take an hour and then safely complete Sir Ian McCartney this afternoon, as far as you’re aware?

Ms Kennedy: Yes, Chair, as far as I’m aware, coming back at 2.00, so taking the full hour for lunch.

Sir Wyn Williams: Fine, very good. So then that’s what we’ll do.

Ms Kennedy: Thank you.

(12.53 pm)

(The Short Adjournment)

(1.57 pm)

Mr Blake: Good afternoon.

Sir Wyn Williams: Good afternoon.

Mr Blake: You should be able to see both myself and Sir Ian McCartney.

Sir Wyn Williams: I can indeed.

Mr Blake: Excellent. Can we call Sir Ian McCartney, please.

Sir Ian McCartney

SIR IAN McCARTNEY (affirmed).

Questioned by Mr Blake

Mr Blake: Thank you very much, can you give your full name, please?

Sir Ian McCartney: My name is Ian McCartney.

Mr Blake: Thank you very much, Sir Ian, for attending today. You should have in front of you your witness statement –

Sir Ian McCartney: Yes.

Mr Blake: – dated 27 September of this year; is that correct?

Sir Ian McCartney: Yes, and my signature –

Mr Blake: Is on page 33 –

Sir Ian McCartney: Yes.

Mr Blake: – is that correct? Is that statement true to the best of your knowledge and belief?

Sir Ian McCartney: Yes, indeed.

Mr Blake: Thank you very much.

Sir Ian McCartney: Before you go any further, sir, could I just point out to the left of me is my friend and neighbour, Mr Adrian Blundell(?), who signed a confidentiality undertaking for yourselves, and he’s here solely to pass any materials or deal with issues around my health profile, if required.

Mr Blake: Absolutely, and he has no personal involvement in any matters relating to the Horizon project?

Sir Ian McCartney: No, none whatsoever.

Sir Wyn Williams: That’s fine, Sir Ian. That’s fine.

Sir Ian McCartney: Thank you. Thank you, Sir Wyn.

Mr Blake: So your witness statement is WITN03370100. That statement will go into evidence and the questions that I’ll ask you today will be supplementary to that. But I will begin just with a brief background. You’ve set out your professional background in quite a lot of detail in your witness statement.

For the purpose of your appearance today, the most relevant is that you were minister in the DTI with responsibility for postal affairs following the May 1997 election; is that right?

Sir Ian McCartney: That is correct.

Mr Blake: That was until 2001 when you moved to the DWP as Pensions Minister?

Sir Ian McCartney: No.

Mr Blake: No?

Sir Ian McCartney: To 1999, that’s when I moved to the Cabinet Office, and such was my duties as a minister that he decided to then send me to the Department for Work and Pensions. Ironical.

Mr Blake: In 2003, you, I think, rejoined the Cabinet Office as a minister without portfolio; is that correct?

Sir Ian McCartney: That’s right, yes.

Mr Blake: Then in 2006 you were appointed as Minister for Trade and Foreign Affairs, and you left government when Gordon Brown became Prime Minister and you retired from Parliament in 2010.

Sir Ian McCartney: That’s correct.

Mr Blake: Thank you very much. I’m going to begin by asking you about the information that you were provided with when you became a minister. You have described in your statement, it’s paragraph 26 of your witness statement, that you were briefed about the Horizon project when you began, albeit you were briefed on a number of other things at the time as well.

Were you aware that Pathway was the least preferred bidder from a technical perspective during the procurement phase?

Sir Ian McCartney: No, and indeed we knew nothing about the procurement phase and decision making, as it had been done by the previous Conservative administration. I do not make a point here – a party political point – where it was a situation where a number of us ministers asked if we could see the documentation to try to ensure, rather than assure, ourselves as to precisely what the agreement was and the reasons behind the arrangements, and what was set out there for the disputes and the resolvement of disputes.

And I wasn’t interested in a partisan political discussions. It may have been in some documents. That’s no problem. But the fact that we weren’t allowed to see is an issue, I think, it’s still not resolved by governments today, and it’s something that should because it also harms any Inquiry like this one, who I’m sure would have liked to have access to the documents as well as ourselves at the time.

Mr Blake: We have seen quite a lot of those procurement documents.

Sir Ian McCartney: All right.

Mr Blake: We’ve also looked at the rules, for example, through the Directory of Civil Service Guidance from around the time. It seems as though the rules do allow for sharing of information for continuity of policy reasons. Were you aware of that at the time?

Sir Ian McCartney: No. No.

Mr Blake: Did you ask for the specific documents or did you ask for information relating to the procurement process?

Sir Ian McCartney: No, I asked for access to the decision-making process, and I think ministers at the DSS, and certainly my Secretary of State, and I’m assuming a colleague at the time at the Treasury.

Mr Blake: Do you recall who you asked for that information?

Sir Ian McCartney: No, the Secretary – to be honest with you, it wasn’t – I didn’t go to the Permanent Secretary, or anything like that. It would be through my personal assistants in the office. I left that to them to provide me with an answer.

Mr Blake: Thank you. That would be your ministerial private office?

Sir Ian McCartney: Yes, indeed.

Mr Blake: Thank you. Paragraph 37 of your witness statement, you have said that ICL and Fujitsu were a huge multinational company with technical expertise, and you would have thought that when ICL were originally appointed, this was on the basis that the persons who appointed them also had that same expectation. Was that something you ever discussed, the fact that they were a large corporation or something along those lines? Were you –

Sir Ian McCartney: No, but the situation was that there were a few companies in the marketplace who were large and significant players in what was a growing global industry, seeking out contracts with governments on these types of issues. And my expectation was that only companies with technical abilities and knowledge and, in some instances, obviously the skills – not in some instances, in all instances – the skills.

And, as we went into this review, and decisions, to see whether we could save it, continue it, or release it and start again, it became obvious to me that both in the public sector and in the private sector, there was a real shortage of technical expertise and, indeed, in the private sector, I would say there was a – there was a dodge being played that when they sat down with governments, they would bring in their group of highly skilled professionals to outline the proposals. But, subsequent to that, it was more junior ranking and less qualified people that were then put in place to take on the contract if it was offered to them.

Mr Blake: Thank you very much, we may go into that in more detail when we look at your reports that you authored. The procurement process began in 1994. ICL Pathway was selected in 1996. When you arrived in your office in 1997, what did you understand, if anything, about technical concerns relating to Horizon?

Sir Ian McCartney: I knew nothing, but that doesn’t mean that anything was kept away from me, in the sense that we’d just become a government and it was normal practice – the first thing after saying hello to everybody, was to get these red binders. In my case, there must have been about 20 of them, which rather shocked me, how many there were, and one of them was the Post Office. It might even have been two from the Post Office, first and second class delivery.

And we – my task then was to very quickly acquaint myself with the issues in the documentation from the Civil Service but, also, I came into office with a list of already – priorities already in the public domain, which included employment relations, the social chapter – I’ll not go into that – and issues around the creation of a low-pay commission and the creation of the National Minimum Wage.

Mr Blake: Thank you very much. You described a tug of war between the Department for Trade and Industry and the Department for Social Security when you entered government. We’ve heard about that quite a lot already but can you briefly give us your take on that tug of war?

Sir Ian McCartney: Yes, I was shaken from my naivety that government across Whitehall all worked together, hand in hand, and in the same order marching bands would do. But very quickly I realised that this project had been established – and it wasn’t the first time and I doubt that it had been the last project where two departments with competing interests were brought together and those interests were legitimate, by the way, from the point of view of the then Department of Social Security and the Benefits Agency, and from the Department for Trade and Industry in relation to the Post Office Counters Limited.

But because of this from the outset, and no central structure in place across Government to determine the priorities for the programme – I’m assuming this because I haven’t seen their papers – but no programme was available that set out who would be a customer, who would be the provider and who, in all of this, would be responsible to ensure the project was indeed agreed fully; that it was transparent, the responsibilities in the project; that there was a process in place, again transparent to deal with issues as there always is in IT, issues around complexity, quality of the work being done; and, thirdly, a timetable to ensure the work and the financial situation were closely monitored and regularly updated.

And what I found from the outset, was that the ministers in both Departments – that includes myself and others – were deemed – basically put in the position of “Here’s the historical situation from our area of interest, and here’s the other interest area”. And then the other minister, if you spoke to them, they would give to me their interest in the area, and their expectations and also, if the expectations weren’t met, what their intentions would be.

And that’s where it was obvious this was a very difficult, difficult situation with probably a breach in people wishing to trust each other, certainly a lack of trust completely in ICL, and a legacy, to the point that – the mistrust had got so complex itself, that was added on to the complexity of the programme, the policy, and that made it an absolute quagmire in terms of finding potentially a way forward out of it.

Mr Blake: You’ve said a lack of trust “in ICL” or was that “by ICL”? Sorry, which one. I didn’t quite hear that?

Sir Ian McCartney: No, a lack of trust in ICL by the players involved, their customer base. It should have been at the outset, a contract – this is my view – a contract with Post Office Counters Limited and that BA was the customer, and the customer required to be satisfied from the outset that what was being constructed would meet their requirements as a business going forward.

But it was also true at the time of the changes taking place in IT – IT – it had a huge potential impact on the world’s post offices and, in our respect, into the Post Office here. As well as having financial obligations, there was political obligations put on them by successive governments, including my own, to have a social input in terms of the structure of the company, the services that were provided across the board in the three companies that were the Royal Mail.

Mr Blake: Thank you very much. You’ve mentioned the Department for Trade and Industry and the DSS. We know that the Treasury also became involved.

Sir Ian McCartney: Mm.

Mr Blake: We heard quite a lot of that yesterday but, again, can you give us your take on the Treasury’s involvement and the impact that it had?

Sir Ian McCartney: Yes, clearly the Treasury had responsibilities for the PFI programme – the PFI programme which covered the previous Government and, of course, the incoming Government also had decided to utilise PFI in a whole range of areas. Easiest ones are things like construction, refurbishment, that type. IT was of a different magnitude, in my view. It was significantly more complex. It was an evolving – I know there’s a science – but an evolving way of doing business and, with that, the complexities of doing business in a way that you were always making the funding up as you went along, and so the Treasury indeed had a huge interest.

And, of course, we had technical expertise in Montague, who I think, also, my first recollection of him – I think he’s a Sir now, isn’t he? Adrian, isn’t it?

Mr Blake: Yes.

Sir Ian McCartney: Sir Adrian. I may be wrong and I apologise if I am, I think he was known to us when he came into office because of his work on the project in the Channel Tunnel with him and another colleague he subsequently came with us, Mr Corbett. And so he had a significant knowledge and skill in relation to these subjects but, even in IT, I would imagine it would stretch him as well.

Mr Blake: Absolutely, and we’ll come to his report shortly. Can we start, though, with your report, which was later on. When was your report? I don’t actually think it has a date on it.

Sir Ian McCartney: It was in 1999, after I moved, and so it was between 1999 and 2000 it was published.

Mr Blake: Thank you very much. Can we look at it it’s WITN03370101.

Sir Ian McCartney: And could you, from that perspective –

Mr Blake: If you’d like to look at your hard copy, it’s tab B1.

Sir Ian McCartney: Thank you.

Mr Blake: I’m going to look at page 12. Before I get to that, what was the purpose behind this report?

Sir Ian McCartney: Right. It’s one of those occasions where you get moved in Government reshuffled, and you get reshuffled, and there’s a lot of nuggets of potential activities, which aren’t on the front of the tin or printed on the tin of the job, and this was one of them. And it became particularly clear to me that there was an opportunity here to learn significantly from my experience on Horizon what became clear in talking to officials in the Cabinet Office, and the fact that the Government were contemplating the establishment or having the establishment of an IT czar, that there was room here for significant work to be done, and the situation was particularly bad across all parts of Government, and indeed, in terms of the skills or lack of skills across Government dealing with these companies, coming from a – taking us to the cleaners.

Mr Blake: Is it fair to say that Horizon is cited throughout this report as, essentially, an example of what to avoid, in many respects?

Sir Ian McCartney: Horizon – and some of the report has been anonymised in the sense that, to get cooperation from both public and private sectors, we engaged a range of different organisations with different types of IT projects, and the skill mix, as you’ll see on the membership of the group of us who looked into this matter, was extensive.

And what we found was that, across the piste, there were substantial issues of a fundamental nature. Not just the structures of Government, the structures in terms of the way in which procurement took place, the lack of structure and the lack of skilled personnel to plan and then to implement, and there were also, across the piste, huge gaps in the management of complex, and sometimes not so complex but they become complex because of mistakes – of IT projects, both in the public and the private sector.

Mr Blake: Let’s go to page 12, if we can, and if we could look at the bottom half of the page there is a section that’s highlighted there, as an example of evidence. It says there:

“A major project involving a number of public sector organisations did not establish a single, consolidated business case until late into development. Although benefits had been identified, they had not been validated against the joint agreement of the total change envisaged. When problems arose, therefore, their impact on the projected benefits could not be tracked against the original change planned, and those benefits were quickly eroded.”

That, I think, is an example of Horizon that you’re citing there?

Sir Ian McCartney: Yes. I can’t remember if it’s specifically Horizon, but it certainly fits the – Horizon’s MO in terms of the project going forward.

Mr Blake: Thank you. You don’t need to turn to it, but it’s on page – electronic page 133 or internal page 106. It refers to number 8, joint venture between the Benefits Agency and Post Office Counters Limited and, in this particular example it has a footnote 8, so perhaps that is that example.

Sir Ian McCartney: Mm yeah. If – do you want me to look at it?

Mr Blake: No, not at all. Can you tell us how this particular problem, that’s identified there, manifested itself in relation to Horizon?

Sir Ian McCartney: Sorry, can you repeat that again?

Mr Blake: Absolutely. You’ve highlighted a problem there in that box on page 12. How did this display itself in the Horizon project?

Sir Ian McCartney: Right, I’m trying to –

Mr Blake: Please do feel free to spend a moment having a look at that particular example.

Sir Ian McCartney: And that’s in my report?

Mr Blake: Well, it’s page 12, and if you look below 1.14 there is a box.

Sir Ian McCartney: Yes. That’s right. I apologise.

Mr Blake: That’s absolutely fine.

Sir Ian McCartney: Yes. This here would fit very snugly in the shoes of the project they’re undertaking to talk about. The problems that advisers would encapsulate here is that the joint agreement of the total change envisaged never was, in fact, a compatible vision in the sense that the visions that the partners had, the business partners had, from the prospect of British – sorry, the Benefits Agency and POCL were entirely different. POCL wanted to be able to maintain a paper-based system to a position that they could realise at a later date a technological fix to ensure that, going forward, they could enter the IT Age with a business which was fit for purpose.

Mr Blake: The lack of a single consolidated business case that’s referred to there, whose responsibility, in your view, was that?

Sir Ian McCartney: Well, that should have been at the outset, when procurement – at the point of procurement, there should have been an agreed management programme and a senior reporting officer. In a case like this, a very senior person identified and agreed to draw up the programme we’re talking about, and this didn’t happen. So you ended up with, on the side lines, the Treasury, increasingly having to pay bills, and then you’ve got the Benefits Agency/DSS, the DTI/Post Office or POCL, and of course, on the other side, you’ve got the company itself, who saw a huge advantage in creating a structure that could be sold on to other businesses worldwide, and if they could get it to the position they wanted it to, would be very beneficial to them going forward as a business.

Mr Blake: Thank you very much. Can we turn to page 15, please, and this is another example in respect of something that went wrong. It’s in the section 2 which is entitled “Leadership and Responsibility” and if we look at that example halfway down the page there. There’s –

Sir Ian McCartney: Page?

Mr Blake: Page 15.

Sir Ian McCartney: Right, okay, I’m going backwards here.

Mr Blake: That’s absolutely fine. Please do take your time, we have plenty of time this afternoon.

Sir Ian McCartney: Right. Page 15?

Mr Blake: Yes. If on the screen we could scroll down, thank you very much. It’s the first example under “Evidence” there. I’ll read that for the record. It says:

“A very large project central to the business of number of public sector organisations, and justified on the basis of a shared business case, did not establish single ownership of the business case and project until two years after contract signing. By this time, much of the original value of the business case had been eroded. The lack of a single point with overall responsible for the project caused difficulties from the beginning, as the different organisations had varying degrees of commitment to the project objectives. This became more apparent as the project progressed and the benefits eroded. Conflict management, prioritisation and resolution processes were also adversely affected.”

Again, insofar as you’re able to, can you expand upon that in relation to the Horizon project? Because the footnote there, footnote 11, again refers back to the Horizon project.

Sir Ian McCartney: Yes. Again, this is evidence that they’d foot the bill in terms of Horizon. You’ve got an agreement two years late, but it’s not an agreement in the way in which the rest of that paragraph suggests, in that once they had an agreement, it was only to have the project done. There was no shared business case, in reality, in terms of the – at the end of this programme, what will be achieved? What were the goals? What would be achieved? Is it workable, and when will it work, and the cost of it, and whether the financial cost will be able to be scaled to a point where the project will be financially viable?

And so, of course, you’ve got BA signing up to get to ACT very quickly, POCL signs up to – not to get to ACT very quickly but provide a platform for them to be able to at least dabble in the IT services area and, of course, the organisation themselves, who had a long-term strategy for the development of ICL and Fujitsu into a company of international importance for the business going forward, and being able to provide a product or products which were seen to be products that would work, in circumstances like the Post Office and other organisations like the Post Office, with a significantly large footfall in the market of consumers.

Mr Blake: Thank you very much. One of the things that the Chair will have to consider in due course is recommendations for the future. As somebody who wrote this report, who did you have been in mind as acting as the single point of contact with overall responsibility in a project like Horizon?

Sir Ian McCartney: Well, there would have to have been an RO it’s so important that there is a person of knowledge, skills, workplace skills, skills in relation to understanding the project management and identifying the targets that were required to be done and how the project is managed and run.

Mr Blake: Is that somebody in government, outside government?

Sir Ian McCartney: It should be a senior responsible officer who can be in government. I would have said at this time, when this was published, you’d be very hard pushed to find anybody in government of that that seniority and skill to take on a task like this, and that’s not a criticism of some of the people that got landed some of this work. It’s an expanding area of expertise and knowledge, which was not part of the public sector going forward, looking at workplace development, workplace training and education. Nothing in terms of the labour market, knowledge of – to be able to recruit and retain and pay responsibly the type of people that were needed. And, therefore, most of the skill and knowledge lay in the private sector making bids.

But that didn’t mean that the private sector was also covered. There was a huge underpinning of the skill base required for this emerging part of the world economy – never mind ours – and I’m still sure today we’ve not got on top of that but maybe somebody else who is more knowledgeable than I am now at this point can disagree with that, but it seems to me that it was a huge accident waiting to happen.

Mr Blake: One final example is on page 44, if I could take you to the bottom of page 44. I thank you. I’ll read that out. It says:

“When examined during the course of this study, four central government projects, involving three departments, were shown to have solutions being developed that would not deliver the business benefits anticipated at the outset. In each case, had the suppliers’ plans been examined and measured against the required business benefits at stages throughout the procurement lifecycle, the emergence of a significant gap would have been exposed.”

So is that saying that there needs to be greater examination and measurement throughout the project?

Sir Ian McCartney: Oh, without a shadow of a doubt. You’re absolutely right in that comment. But it’s a bit more than that. It only works throughout, if you know what – before you start, what is your programme of work, and what will be the choices you make in respect of being able to ensure that suppliers’ plans are robust, are transparent and clearly capable of carrying out the contract that you’re signed up and giving to them.

And that was not always the case. Because of a lack of skills, again, you took – not for granted, but you took on trust what they were saying. And this goes back to an earlier point of myself that they put their A team up and then give the public sector their B or sometimes their C team to carry the project out. And that’s when you get purely exposed in the gap between what you expect in outcome at the outset, and what’s delivered isn’t at all like what you expected.

Mr Blake: We will probably come to it in due course, but just pausing there, then, is that what you experienced with the Horizon System?

Sir Ian McCartney: Well, that’s part of the experience, yes. But the –

Mr Blake: That refers to a few different examples –

Sir Ian McCartney: Yeah, but it was also not just due to this type of evidence. It was also still due to the fact that the Departments involved in Horizon had different endgames envisaged, and you could say that ICL was left to weave a way through the middle of the two of them.

Mr Blake: So did you feel that you were being given the B or C team by ICL or was the problem more about ICL having to navigate the Different departments or both?

Sir Ian McCartney: I think it was part of both. And I don’t want to be unfair to ICL in respect of the skills that these people were in place, where I arrived at, anyway, into post, but the reality of the delay and when they started initial discussions about how do we get out of this delay, some of the – by the time some of this would come forward, it would have been nearly 10 years, and still not a computer in a Post Office Counter anywhere.

And so it seemed to indicate to me that, at the very highest levels of the project, the people senior on the project themselves either had failed completely in carrying out instructions, but more importantly, they would probably have argued – they would argue that much of the job became overcomplicated because the Government Departments hadn’t done sufficient work themselves in relation to their own solutions. And every time a mistake or a difference of opinion came up in something, it was further cost, further time – time restraints, until another solution was found to go and help develop the programme. I don’t know if that’s helpful or too long winded.

Mr Blake: Thank you very much. In that example there, you’ve referred to – I think there were a few different examples. One of them is Horizon. Another was the National Insurance Recording System or NIRS2. I don’t know – you haven’t been asked about this in your witness statement. I don’t know if you remember it. But –

Sir Ian McCartney: I’ll tell you how I remember it. It’s not because of the shambles. It was when I became a Minister for Pensions in the DWP with Alistair Darling – it just shows you how the roundabout goes round – and I started getting letters and complaints from the public, and it was only then when I asked “What’s all this about and why the delays?” and it was then they told me about the falling over of the system. I think when it was switched on it fell over. And it was a number of years – in fact, they were still, I think, at it when I left the Department in 2003, were still working on getting back the material that was lost, or trying to find it and, as a consequence to that, they were taking years and years and god knows the cost to get the system online and working effectively, and all the material records and stuff that should be on it were on it.

Mr Blake: We heard from Lord Darling, he had raised NIRS2 in a letter, warning about what not to do in terms of rushing things out without proper testing. Is that something that you remember at all?

Sir Ian McCartney: Proper testing of NIRS?

Mr Blake: Yes.

Sir Ian McCartney: Yes, I can’t remember the letter but I’m not surprised, and I can be fair to Alistair Darling, he never spoke to me about it. We worked very closely. And so I apologise, but I’ve got no recollection of the letter. It’s quite –

Mr Blake: No, not so much the letter, but were you aware during your involvement in Horizon of concerns from, for example, Lord Darling, about previous IT projects that had suffered problems because of a lack of adequate testing?

Sir Ian McCartney: No.

Mr Blake: No.

Sir Ian McCartney: Absolutely not.

Mr Blake: I’m going to move on to the running of the Post Office, and can we look at your witness statement at WITN03370100. Thank you very much. Can we look at paragraph 21, that’s page 8.

Sir Ian McCartney: Thank you.

Mr Blake: Thank you. It’s on screen, if you’d like to see it on screen –

Sir Ian McCartney: I’ve got it there.

Mr Blake: – and I’ll also read you the passage. It says:

“From my perspective, as the Minister with responsibility for the Post Office, my role was to represent the points of view and problems faced by [subpostmasters] and POCL. The latter was a public body that, in my view, could and should have been doing better – a business of its size and complexity should have a more detailed forward plan about how to modernise and bring into the business technology which was already in existence in one form or another in post offices around the world.”

Can you expand upon that, please, and tell us why you reached that conclusion about the Post Office?

Sir Ian McCartney: In general terms, in answering that, I very quickly had concerns about the whole breadth of Royal Mail, including, of course, POCL. All three businesses faced significantly large issues in terms of market, in terms of technology, skills and a lack of opportunity to expand their markets in a way that they hadn’t or hadn’t been allowed to over a long period of time.

For example – I’ll come to POCL in a minute. For example, the Royal Mail and its industrial relations problems have led to the situation of a lack of a lot of progress in terms of the introduction of new technological equipment to improve their operation and the delivery of the post that they received.

The problem with their delivery distribution group – there were some when we came into power in ‘97 in the Treasury who wanted an immediate privatisation of this section of the Post Office, because it lacked capital investment and was underperforming in a growing market in terms of logistics. I wanted the company to consider seriously becoming not just a postal distribution parcel company – Parcelforce, I’m talking about – but I wanted it to be a logistical company which wasn’t taking a van load up to Scotland with parcels and coming back empty. It really needed to be better run and provide, with capital investment, the appropriate vehicles and stuff, and could have been a big competitor, in my view, across the whole distribution market, and not just parcels.

And, of course, POCL is the third area and this was an area which – I don’t think they took a sense of where the wind was blowing when IT – and I don’t blame them, this is true of both public and private sectors all over the place – that how quickly IT would become so important to not just the retention of the business but, more importantly, how to expand it, and be able to have a business which looked after the needs of citizens who were going to be increasingly engaging in IT purchasing and, through that, being able to, from the Post Office point of view, being able to ensure that, even if they go to a – were going to use banking services, they should take advantage of the then and continuing – even today, I noticed – banks closing huge numbers of branches and the only availability of services previously in rural and some urban areas would be a Post Office with an IT technology, delivering for the banks, where they’d withdrawn their services.

Mr Blake: Sticking specifically with Post Office Counters Limited what was your view of their leadership?

Sir Ian McCartney: Ooh … (The witness laughed)

Maybe unambitious, and I don’t want to be unfair. I mean, I find these people were hardworking and wanted to do their best by people. But, I mean, the leadership of it also stems from the board and the boards that preceded them. And so there also lies, because of this, because of governments prior to us coming in and subsequent, the Post Office was sat upon and used as a cash cow by the Treasury over 20 years or more, I think, where when they were making profits, a lot of that was just profits which were taken by the Treasury and recirculated. But none of it recirculated back to the Post Office for investing in the future.

And so, being seen as a cash cow, suddenly because of what’s happening with new technology, it’s no longer a cash cow. It’s going to be having cash given to it in huge amounts over a long period of time. And so I do think that this affected the management and their attitude that, even if they’d brought forward new ideas, it would depend upon the political decision by government ministers.

Mr Blake: Was it in some way easier for them to sit on the cash cow than spend time developing new IT projects?

Sir Ian McCartney: I’ve got no evidence in the sense of a paper I could show you, but I think there was a great deal of disincentive because if you thought about it for a moment, if your business – you’re working through a huge customer base and at the end of each year, in the main – not every year, but in the main – significant sums of profit are made, and that profit then, before you can even discuss it, is transferred – has to be transferred out to the Treasury. You have to say to yourself “Well, what benefit have” – I don’t mean me personally, them personally – the business that they’re working for, and the business that they support.

I found that people that worked for the Post Office are very loyal to the Post Office. At every level I’ve found that. And so the disincentive wasn’t the caring – if there was a disincentive, I think it was out of the way in which central government dealt with the Post Office over a long period of time.

Mr Blake: Sir Adrian Montague’s evidence was that the Post Office had failed to develop a comprehensive and effective approach towards managing the project. Would you agree with that or would you disagree, or would you say something slightly different?

Sir Ian McCartney: No, that is a fair summarisation from the Treasury spokesperson.

Mr Blake: I’m going to move on to the subject of technical viability and reliability. I think you’ve heard the evidence given by Mr Sibbick in relation to the Montague report; is that –

Sir Ian McCartney: Can I say I was so pleased to see how well he was and how sharp he still was, and I’ve a great deal of – not a soft spot, I’m not that kind of person, but I really appreciated his work when I was a minister.

Mr Blake: By the sound of it, you had a lot of faith in the information that he gave you that it was reliable?

Sir Ian McCartney: Yeah, not only in terms of its honesty, but also the transparency of why he was giving the advice to me in the first place, and his capacity to take very difficult issues, which he had dealt with for many years, if I can put it that way, relationships with the Post Office, and the Treasury, and was able to take me through it and probably made me a better minister in dealing with it.

Mr Blake: I’m not going to spend a lot of time on the Montague report because we have seen it and we know what it says, but I’ll just take you to the executive summary. It’s POL00028094.

Sir Ian McCartney: And that’s what?

Mr Blake: If we can look at page 3, please, that’s where the executive summary is.

Sir Ian McCartney: Right, okay.

Mr Blake: Now, I perhaps don’t even need to ask you about anything that’s written there, because if you’ve heard the evidence of Mr Sibbick, I want to pose a similar question to you, which is: was your understanding that this report was saying that Horizon was robust and reliable or that it was a viable or feasible system, or something else?

Sir Ian McCartney: Yes. It’s what you mean by “robust”, I think, is key here. I think it was robust in the sense that, at the point that he looked at it, there was either in place, or there was going to be in place, a means of having a business structure and plan to carry out the project in a different way but bring a project to fruition from where it was. And that was what he recommended. If you said it was robust in terms of signing it off and setting out a date to start the services in post offices, I wouldn’t say that at all. No way were we anywhere near that.

Mr Blake: If we look at the second bullet point under “Findings”, it says:

“Our view is that the programme is technically viable. There must be some risk around scalability and robustness because the system has had to be tested at the level of component parts”, et cetera.

There are sections in this report that identify problems that are identified. Was your understanding at the time that you received this report that it was signing off Horizon as robust?

Sir Ian McCartney: I’d have to, in the sense of answering that, give you a general view. You could interpret it that way but, from my own point of view, with all the documents that are coming across my desk on this and discussions I’ve had, and from various relationships involved in the project, I wouldn’t have been – I wouldn’t have enough information or proof, as it were, enough history to say that all the component parts tested – all fitted together and were well managed through the system. And I think the papers that you follow on over the months proved that to be the case, in terms of – I don’t mean supporting my theory. I don’t mean that at all.

I mean, I think it proved the case just how much work had to be carried out following this report and, indeed, how close it came to collapsing.

Mr Blake: Thank you very much. I get the sense that you followed quite a lot of the evidence of Mr Sibbick and others, and that I don’t need to take you to those consequent reports and matters such as that. I’ll very briefly take you just to a November 1998 document, so it’s BEIS0000103. I think it’s your D2, if that helps. I’m only going to look at it very briefly, because this is shortly after. So the Montague report was July 1998. I’m going to look at page 15 of this November 1998 document and it’s paragraph 6, on page 15.

Sir Ian McCartney: Have I got the right document, B?

Mr Blake: D2. Sorry, D.

Sir Ian McCartney: D2?

Mr Blake: Yes.

Sir Ian McCartney: Right, the document I’ve got in D2 is “BA/POCL Automation”.

Mr Blake: Absolutely, yes. That’s a progress report and it has your name in the top right-hand corner on the first page or your private secretary slash your name.

Sir Ian McCartney: That’s page 6?

Mr Blake: Yes. Sorry, page 15. Internal page 14, but it’s our page 15. The detail of this report doesn’t really matter, and I’m just going to read you a very short passage.

Sir Ian McCartney: Apologies for the – on page 15, mine is “Comments on funding proposal”, and it’s got –

Mr Blake: It’s the page before that.

Sir Ian McCartney: The page before that –

Mr Blake: Yes.

Sir Ian McCartney: – hasn’t got –

Mr Blake: It should have something that says, “Acceptance” there, number 6?

Sir Ian McCartney: Yes, apologies. I’ve got that now.

Mr Blake: I’ll very briefly just read that one paragraph there. It says:

“ICL Pathway’s proposals on Acceptance would mean that the Contracting Authorities would be locked into the system before it has been fully tried and tested. BA and POCL have already made a very significant concession on Acceptance as part of the Corbett proposal, ie in waiving their termination rights at Acceptance of NR2, which has not delivered the full contracted requirements. Both parties are not willing to bring forward acceptance before the end of the Live Trial. Both parties are prepared to consider a modest increase in the number of allowable faults but not in the magnitude being proposed by ICL.”

Do you recall, in the winter of 1998, movement away from trials with regards to ICL’s negotiating position, that they wanted to have less testing of the system, effectively?

Sir Ian McCartney: Yes, indeed, and it was one of the issues that the group that I established via the Secretary of State, Stephen Byers, of the staff unions, the postmasters, and other key people, as one of the things that I wanted us to do was to be able to monitor and monitor effectively the trials and the quality of the trials. And, despite the need for us to get to a point of where we established, as soon as we can, the programme in terms of rollout, it shouldn’t be rolled out at the expense of quality and transparency of the trials.

Mr Blake: Yes. Absolutely. We’ll get to the Working Group shortly, but just sticking it in the winter of 1998, I’m going to take you to a document that you will, again, already have seen. It’s BEIS0000418. This is a month after that update that we just saw, and this is the letter from Peter Mandelson to Stephen Byers.

Now, at this time, December 1998, we’ve heard quite a lot of evidence of a real divide within the Government Departments about the future of the project. The picture that is painted in this letter is quite stark, from the Secretary of State for Trade and Industry. If we look lower down the page, please, the final paragraph, Lord Mandelson saw two options: continuation or, in the words that he’s used on that second bullet point:

“or we can take a major step into the unknown, delaying the modernisation of the Post Office Counters network, risking the departure of existing clients and virtually eliminating the possibility of attracting new ones.”

It’s in this letter, having painted the stark picture that, if we go over the page, he uses the following words. He says:

“There is still some way to go to complete the Horizon project, but the basic development work has been thoroughly evaluated by independent experts who have pronounced it viable, robust and of a design which should accommodate future technological developments.”

Did you understand, at that stage, that Horizon was robust, or was that putting a gloss on how things were, or something else?

Sir Ian McCartney: No, I don’t think that – despite his reputation, I don’t think that’s what Peter Mandelson was doing. When he became the Secretary of State, from my knowledge, he was very hands on with this with me and engaged with us, and he had a really strong view of the Government and the development of Government Departments and businesses, and so he did have a knowledge of it. He may well, of course, have been given further briefings which he would have told me about, and so I think this would be his honest view of the information that he’d had. This may have been because they’d worked hard over the previous weeks and they’d seen other papers, where the situation looks hopeless, and once heads were knocked together they made quick progress on matters between them. So this may well be one of those which he’d be happy with.

Mr Blake: If that was reference to the Montague report, would it be correct?

Sir Ian McCartney: Well, I don’t know that I can comment that, in the sense that is it the exact same information as he got from – that Montague got or is it a subsequent look at the situation and evaluating it? I notice there are independent experts. I’m assuming that – I’m not sure if that’s CA or –

Mr Blake: Sorry, we’ve just had a fire alarm. We may need to break.

Sir, perhaps this is a good time to take our mid-afternoon break.

Sir Wyn Williams: Yes, that seems fine to me, Mr Blake.

Mr Blake: We’re probably meant to rushing about a lot more.

Sir Wyn Williams: Let’s have a break, in any event, for ten minutes and if it’s going to be any longer, you let me know.

Mr Blake: Thank you very much.

The Witness: Thank you.

(2.59 pm)

(A short break)

(3.18 pm)

Mr Blake: Thank you very much, sir. It turns out there wasn’t a fire. Thank you.

Sir Ian, we were just looking at document before the break, from Peter Mandelson, where it states that:

“Independent experts have pronounced it as viable, robust, and of a design which should accommodate future technological developments.”

We’re interest in knowing where the term “robust” comes from, or if it’s used in the same way by Government as it was later by others. Was that term used, to your recollection, within your department, as shorthand for the state of Horizon?

Sir Ian McCartney: Yes. I think that would be a fair point to make. That’s why I said in a previous answer that the interpretation of “robust” – I didn’t say it in this way, but “robust” is quite a stretchable phrase. And in that respect, I’m absolutely sure you’ve got – you’ve now got a “robust” from the then Secretary of State, a “robust” from the Treasury spokesperson. And as a consequence of that, we were in a situation where I suspect that we were now going to try and move on to see if – with the situation, as explained by both of them, that we could try and take things forward to proceed with the project. And that, I would advise ministers at the DTI – which includes myself – were probably very concerned that the package could still – is still – be withdrawn, that the programme would be withdrawn, and the consequences for that would be very difficult indeed. And, obviously, very robust in negative terms.

Mr Blake: So in this period, is there a degree of trying to sell Horizon to the rest of Government on behalf of the Department for Trade and Industry?

Sir Ian McCartney: I would say that there was obviously advocacy involved, and their advocacy’s involved because of the commitments in the manifesto, and other things about the future of the Post Office, and the Post Office’s Network that POCL were responsible for.

And in that situation I would find it very difficult indeed for the Government – indeed, not only difficult, in many areas impossible, having given that commitment – quite freely and openly committed ourselves to the network – that unless we had, going forward, a business plan and a technological plan, then that commitment could never – could never have survived.

The closure programme would have intensified. The customer base would be eroded extremely quickly, in my view, and the consequences for that for the Post Office Counters and the Government’s veracity in its claim in its manifesto would be – well, it would be knocked out completely.

Mr Blake: So would it be fair to say that by then, by December 1998, as far as the Department for Trade and Industry were concerned, abandonment was out of the question?

Sir Ian McCartney: Yeah, I would say abandonment was out of the question, but it was a bit like – I felt like a poker player where I got showed three hands and none of them would win a game. And so you had to then think: what was the best one? What was the best chance you have in getting across what we wanted to do, in the end, and find a way of doing it to ensure that we did get a new technological platform, going forward, for the Post Office that the Benefits Agency got what they were committed to during the election: an electronic safe system for delivery of benefits, and the savings from that being able to be regenerated? And I would imagine we were, at the time, saying anti-poverty measures.

And so there was, I think, a necessity to – not to forget those commitments.

Mr Blake: Can we look at CBO00100001_072, please.

Sir Ian McCartney: What’s that?

Mr Blake: You don’t need to turn to that. It’ll be brought on to screen, and it’s a document that we won’t go to any detail in, but it’s one that you will probably have seen through other witnesses.

Sir Ian McCartney: Yeah.

Mr Blake: It’s the note from Geoff Mulgan to the Prime Minister, and it’s page 4, paragraph 8, where the message to the Prime Minister is – and it’s the last few words of that paragraph – I’ll read that paragraph. It says:

“At first glance, most of the factors point towards continuation. However my view, which Lord Falconer shares, is that although short-term considerations and expedience point strongly towards making a deal, this will in the long run prove unsatisfactory, leaving the Post Office and Government dependent on a hugely expensive, inflexible, inappropriate and possibly unreliable system.”

Then over the page we have the handwriting of the Prime Minister at the bottom. And again, there’s a reference there to the system itself being flawed.

And my question for you arising from that document is simply that we don’t see those kinds of concerns about reliability being displayed in documents coming out of the Department for Trade and Industry at that time. Is that something that you agree with?

Sir Ian McCartney: No, can we just go back? Geoff Mulgan has written that, and to my knowledge, at the time he was writing it – and he’s a very good advisor, or was – never spoke to any of us. I mean, that’s a personal opinion that he has personally expressed, and he’s done it in a way he’s picked out items from various sources and put together an argument for the Prime Minister. I mean, it’s not unusual from a special advisor to put an argument in that way.

The interesting thing – although the Prime Minister’s note – the Prime Minister didn’t waiver from the need to continue the project. The Prime Minister was secure in the view that the project had to be found a way of working, and even put forward, I think at some point, suggestions on how to do that. So interesting as it was, Geoff Mulgan’s – I will just it’s a note in history, and I think the project has lasted longer than he did.

Mr Blake: Do you not think that, at the same time, the Department for Trade and Industry were doing the same thing in not highlighting flaws with the system?

Sir Ian McCartney: No. I mean, I can only say, as a minister, I’m given information that I knew that I would be nothing other than transparent and honest, even if it upset people, and even if it was – transparency made it more difficult for me to put a case. I saw no benefit whatsoever, given that I was arguing for a transparent system from the beginning, not to be transparent.

Alongside of that, I had a duty – and this is transparent as well – to put across the consequences. Because in the end, I’m not an official; I’m a politician. And my political brief, given to me by the Prime Minister, was to ensure we implemented what we’d said about the Post Office. The fact that I knew nothing of ICL until I came to Government, that just happens. That’s, for a politician, another day in the office to sort out – that the situation is different to what you first envisaged. But I had a duty of care to the Government in that sense, but it’s not a duty of care to mislead or misrepresent. It’s a transparent responsibility that I would be carrying out.

Mr Blake: Absolutely. If we put allegations of misleading totally to one side, I think the suggestion might be that the Department for Trade and Industry weren’t looking to where they should have been, in terms of the technical robustness of the system. They weren’t carrying out those kinds of investigations because they were so headstrong that they wanted the system. Is that something that you would agree with?

Sir Ian McCartney: I’ll take you back to it, and the McCartney report highlighted it in spades. And to be fair to Mr Sibbick, yesterday, he made the point. He wasn’t technically engaged or trained to do this. His training and skills were at a different level, and the level of his skills were for me, as a minister, were extremely helpful. Very helpful and sensible and pragmatic.

The point is that DTI, POCL, BA, DSS didn’t have the sufficient number of technical experts. Indeed, if they had any at DTI, I’d like to know who they were.

Mr Blake: Absolutely. I could take you to some more ministerial submissions, but perhaps I don’t need to because there are submissions throughout December and later in the year that are pleading the case for Horizon, but that aren’t dwelling on technical matters. And is it your evidence that that’s because they simply didn’t have the technical expertise to look into those kinds of things?

Sir Ian McCartney: That’s partly true, yes. But remember, they’ve got the political pressure of a White Paper coming down the track. You’ve got opinions asking – and quite rightly, postmasters – about the situation, and when are we going to come – somebody come up with a proposal that looks like it’s going to be doable and be effective?

And the objectives that were set right at the outset for this project, and therefore you will see, and in some places you may see in the paperwork, I got the impression of it being not a mêlée as such, but a huge amount of activity on the political front of people putting their points. But the points are put in a way that it leaves a door open for some other kind of discussion. And in the end, reading the documents, I must admit, I was getting confused at some time as to which option we were looking at. We were getting options flying around the room with option A, option B0, option 2, option 3. Then out of the blue, another option comes up: A2, with Lord Falconer’s name on it. I never actually seen that one, so I don’t know what it said.

And just reading the documents, it does look like a maelstrom of activity, where people in favour of the project were putting as much effort as they could into it, intellectually and politically, to try and establish something with the time clock going closer and closer towards a collapse in the project.

Mr Blake: Would it be fair to say that the Department for Trade and Industry wanted to shut the door on further discussions so they could get on with the project?

Sir Ian McCartney: No, that would never have happened under the Secretary of State that we had, and I wouldn’t advise that. And you’ll see in the documentation the importance that we laid on getting agreement, and we would help facilitate those agreements. And those agreements could be quite complex. You get POCL and their arrangements with ICL, then you’ve got BA and POCL, and then BA and ICL. And this kind of pyramid sometimes felt it was sitting upside down. It wasn’t something – it was other than shaky, at best.

And so it was important that whatever, in the end, we came up with, it was doable. It was transparently so. I know I keep using this word “transparent”, but it’s so important in public life. And that the finances were available on an agreed basis to take the project forward, and the design work, the engineering work, the strategic work around it, building the project to the ability to go live, it was critically important that all that was agreed, and there was a signed agreement in the end.

And there was a date in April sometime, I think. It was critical, because Fujitsu’s board were meeting in April. I only say April – I think it was around about either my birthday, the 25th, or my granddaughter’s, the 23rd.

Mr Blake: We’ll get to April shortly.

Sir Ian McCartney: I’m not saying that to get a card off you, by the way. That was the kind of timescale that we were potentially having to work to.

Mr Blake: Sticking with the winter of 1998 – and I will move on from this period shortly – as you’ve fairly described, there were lots of discussions at a political level. I’ve mentioned before, in November, discussions about testing. I’m going to look at a document from December, 14 December, that also talks about testing. That is BEIS0000400, please. It’s a letter from yourself to Stephen Byers. If you want the hard copy, it’s D98, but again, I don’t think you necessarily need to turn to it in hard copy, because it’s one paragraph that you may have seen from others’ evidence.

It’s a letter from yourself, as I say, to Stephen Byers. And if we go over the page, there is there a discussion about – it is a dispute that has taken place with Alistair Darling, and it’s about acceptance testing. It says there:

“Third, acceptance testing. Alistair states that ‘ICL persist in asking for acceptance on the basis of a laboratory test of the system as opposed to a live trial …’. We agree with him that it is a hugely important point. It would be unthinkable to sign off acceptance of the system until it has been shown convincingly to work on a reasonable scale in a live environment. But Alistair is we believe mistaken. ICL are asking no such thing. The company have moved substantially from their 9 November position and we have now conceded that acceptance will follow live trials based on the NIRS2 software released at 300 offices. More specifically, there are 24 separate components of the acceptance test procedure. Some do indeed involve elements of bench and/or model office testing, but all also include live trial in 300 offices.”

When Lord Darling gave his evidence, he expressed some concerns that he had concern at the time about the size of those trials, only in 300 offices, when it was going to have such a significant project throughout the country, when it was finally rolled out. Do you recall those discussions about testing at that stage?

Sir Ian McCartney: Not in detail, no, but having said that, when I established the panel that I’ve set up, the point I made, both in writing and in person, was that I’d like to see us, as a group, press for large-scale live trials. That, I think, is the word I used: a large – a large scale. And this is the group that was established by me with the appropriate representations of the unions, postmasters, postmistresses, and other key people.

Mr Blake: Absolutely. We will get to that very shortly. But just in terms of testing, do you remember a continued theme throughout this period and onwards was ICL not wanting to carry out further model office testing that the Department for Social Security wanted at that stage? Do you remember that discussion at all?

Sir Ian McCartney: No, but I wouldn’t be surprised, because there were quite a few occasions through the whole saga. You had to really push ICL to do what’s been requested by each customer.

Mr Blake: Can we –

Sir Ian McCartney: It goes right back to the early discussion about the lack of senior responsible officers – officer, and a development programme, and a programme alongside of that in terms of implementation. And if we had that in place, it shouldn’t have required to get letters from Alistair or from me, interpreting information from the frontline from people who may have an interest in the frontline as to its outcome. And so that’s not an excuse; it’s an absolute fact. This just shows you the difficulties when you’ve not got in place the recommendations that are in the McCartney report. So I’m trying to make it a bestseller.

Mr Blake: Absolutely. So you have the lack of a single point of contact, and I think you’ve also expressed concerns about a lack of expertise on the Civil Service side.

Sir Ian McCartney: Mm.

Mr Blake: And perhaps we can go to your witness statement. That’s WITN03370100. And we’ll start at page 12, paragraph 29. So this is talking about 1998, and you say:

“At the time, technical knowledge and understanding of computer systems in Government was extremely poor. Few people had the knowledge and understanding of procuring and developing systems such as Horizon, and so the civil servants managing the project did not always have the appropriate level of understanding to identify or raise issues.”

If I could look at another paragraph, it’s paragraph 29. Sorry, paragraph 69, page 29. Sorry, page 30, over the page. Paragraph 72. So it’s at the bottom of page 30. It says:

“At the time, promotions within the Civil Service were based on years of service. So you had people who didn’t know how to turn on a computer leading on IT issues, and we were getting taken to the cleaners in negotiations with software companies.”

Sir Ian McCartney: Yeah.

Mr Blake: Now, at this stage you had the Montague report addressing technical viability, as we’ve discussed, a very early stage snapshot. You have ICL moving, or trying to move away from certain types of testing. Am I right in saying that at this stage, so late the 1998 into 1999, there was no further significant Government commissioned analysis of the technical viability of Horizon?

Sir Ian McCartney: That would have been my understanding that was the case, but that doesn’t mean that was actually in practice. I just don’t remember anything like that coming across my desk.

Mr Blake: The in-principle agreement was not until 24 May 1999.

Sir Ian McCartney: Mm.

Mr Blake: Would it be fair to say that, to the best of your recollection, there wasn’t a significant, independent or otherwise, report into the technical reliability and robustness of Horizon?

Sir Ian McCartney: Yeah, that could have – in my view, looking back, as I do, in terms of lessons learnt – that should have been a report alongside of the other report giving absolute clarity of what had been done to secure the objectives in the way that you describe, and that should have been – would have been signed off or should have been signed off by a senior reporting officer.

And again, that’s another sign of the lack of the structure in terms of management. Management control.

Mr Blake: I’m coming now to the thing that I think you’re very keen to talk about, which is the Horizon Working Group of 1999. Am I right in saying that you saw that as a forum to raise those kinds of technical issues?

Sir Ian McCartney: Yes, if people knew of them. The point, for me, was that during all the discussions that I’d been involved in as a minister, and meetings with other ministers and colleagues, the one element which I thought was inadequate, that was the engagement of people where the technology would impact on, in terms of a business, or in terms of as an employee, in terms of being a manager. It was always discussions with people at the top, and I wanted – and I’ve got a view of life, still have, that people’s lived experience is as important as the so-called professional experience that people are claiming. And if I wanted a group set up, and suggested the group to the Secretary of State, that this group would be a door opening for people with skill, knowledge and commitment, who, from their practical experience, knew what was required on the ground, knew what they wanted on the ground, and had the capacity to understand whether or not the systems in place would be robust or not, or that the system being put in place would be sufficient to ensure that the business on the ground was able to continue and flourish at a later date, in terms of a development of other products.

And the other reason with the unions and the CWU, the CWU, for many years, had had issues along the lines of the introduction of technology, which I alluded to in a previous answer. And it was therefore important to me that their experiences, negative or otherwise, that it was important that they felt part of being engaged in making decisions about this very, very big, difficult, complex, and in-trouble policy.

Mr Blake: Can we look at BEIS0000345, please. That’s your D53, if you need a hard copy. But again, I don’t think – we’re certainly not going to go into detail in this document. It’s a submission to you from David Sibbick of 7 June 1999. It addresses the initial meeting, the first meeting of the Horizon Working Group. It’s a steering brief. And if we scroll down, we can see those who attended.

Now, bearing in mind the time here is 7 June 1999, detailed agreement between Post Office Counters Limited and ICL wasn’t reached until 28 July of 1999. So it seems as though the Horizon Working Group was working in parallel with discussions in respect of the detailed agreement between the parties. Was that intentional?

Sir Ian McCartney: Yes. I think it was. Certainly from my perspective, if I could have got agreement, I’d have had the Horizon Working Group in place before when we did do. But the timing of it was down to the politics of it. I don’t mean partisan politics, I mean tension of politics of where each of the main players were positioned in the discussions that were taking place. And so the balanced came to: let’s get the group up and running now, and then potentially get to the endgame, whatever that endgame is. And so that’s why we met, and this was the first meeting.

Mr Blake: We see there the attendees included the Managing Director of Post Office Counters Limited, and Mr Dave Miller from Post Office Counters Limited, the CWU, the Communication Managers Association, and the NFSP.

Sir Ian McCartney: Yes. I think the Communication Managers Union is now part of Unite the Union.

Mr Blake: And what did you envisage that the three different associations there would bring to the table, in respect of their various roles and responsibilities?

Sir Ian McCartney: Okay, well, the Communication Workers Union were involved in the mechanisation of the Royal Mail’s delivery collection, delivery services, and there had been, over the years, some difficult discussions between management and – well, the company and the unions. Obviously I was never involved in those, but I knew of them because of my knowledge of the General Secretary, Derek, and others before him. And therefore, it was important to ensure that they felt they get, from their perspective, a view of how IT should be introduced, and how it should work, in terms of those engaged in making sure it works.

And the Managers Association, which as I say was a big part of Unite the Union, these are the managers on the floor working with the CWU members. And as management, of course, their duty is to put across the view of the company itself on issues, as well as expressing their own issues about it. And therefore it was important that that level of management expertise and knowledge got reflected in what was happening for the endgame.

And then the subpostmasters – I mean, that was critically important. It’s not just the fact that they had 20,000 outlets; it was that most of them had experience and years of knowledge of their customer base, the operation of the facility, whether it was a single Post Office or, like most of them, you know, a shop which included the Post Office, and their knowledge, in terms of what would be required for them to be able to sustain their business.

Secondly, in retiring, as many people were doing – some of course obviously because they didn’t want technology, fair enough – but lots of them were getting to the age where retirement was a great option for them, and as a consequence of that, procedures were in place, in terms of payments to subpostmasters who were leaving. And it was important, therefore, to them that the business, when it went for sale, was viable, was feasible. Because if it didn’t, it would be just be collapsing and nobody would buy it, and it would be impossible for it to be bought. And so it was critically important, that.

And also, of course, they’d sunk, as I understand it, as I remember, approximately £1 billion of their own money over the years in the business itself. And that shouldn’t be sniffed at, given that £0.5 billion had already been spent and covered, and no equipment had been put in the Post Office. And so I think that was one of the important reasons why they got involved.

Now I always found that the General Secretary, like any other General Secretary, puts the case for their members, and advocates them. I always found him a man who gave me it from the frontline, and didn’t mix his metaphors, and in a way in which I could fully understand that what was happening on the frontline, as far as postmasters were concerned.

Mr Blake: So there you’re talking about Mr Baker?

Sir Ian McCartney: Oh yes.

Mr Blake: Yes. In respect of the three of those organisations, was there one in particular that stood out with regards to what you imagined they would be able to help you with, when it came to the technical side of Horizon, or were they equal?

Sir Ian McCartney: No, it wasn’t a matter of being equal. They all gave what they could to the discussions. And they were coming from sometimes a potentially different expertise, ie subpostmasters didn’t work in the big sorting offices that CWU members did. So CWU union members didn’t run sub post offices, but that was, in the rural areas in particular, a base for postmen and postwomen to deliver. And, of course, the Communication Managers Association, it’s now Unite the Union, their task was to implement and ensure the smooth running of technology changes in the Post Office, and therefore their knowledge, in terms of not only what happened technically, but when actually equipment was put in place, what was their response to it in terms of staff, skill, knowledge, willingness, et cetera? And so they also had a story to tell.

Mr Blake: Can we look at BEIS0000345, please. That’s your D53. Sorry, that’s the same document, is it?

If we could go now to BEIS0000346, and that’s your D54. This includes the proposed terms of reference for that group, and can we look at page 2 at the bottom, please. You may have heard these being read to Mr Baker this morning but I’ll read them out again, just in case.

Sir Ian McCartney: No, I didn’t.

Mr Blake: Okay. So it says there:

“I see the work of the group as falling into three main areas. First, there are the negotiations between POCL and ICL, and between POCL and BA, that need to take place over the next few weeks to put in place the detailed contractual arrangements that will give effect to the outline agreement reached on 24 May.”

So that’s as I said, that they had reached the outline agreement and were still negotiating the detailed agreement:

“I see a role for the working group in carefully monitoring these negotiations and in addressing and helping to resolve any sticking points that may be encountered.”

Over the page, please, thank you:

“The second area covers the remaining development of phases of Horizon, including large scale live trials, system acceptance, and rollout of the system smoothly and in a timely fashion to all offices within the network, followed by the migration from paper-based methods of payment to ACT-based payments accessible at post offices. I believe that the Working Group could provide a valuable forum for bringing pressure to bear where needed and for seeking solutions to any problems that may arise.”

Just pausing on that second one, can you give us an example of what you had in mind when you said “seeking solutions to any problems that may arise”?

Sir Ian McCartney: Yes, well, as you will note, the – in the whole of this group of events, when you think you’re getting a smooth run at things, suddenly something out of your left side arrives, and it’s a showstopper. And, as we know, that had been happening on a regular basis, and there were still now at a point when this was going on, issues to be resolved, and some of those issues still related to the final look of the project, in terms of options.

And it was important that they brought some pressure to bear from their experience and knowledge, in particular subpostmasters, to – being able to express their views in what they would see as a way forward to any of the problems that arise. And also, that put pressure on me, and rightly so, to ensure that they were aware of what problems had arisen and I had been informed about.

Mr Blake: It says:

“The third area concerns the commercial exploitation of the very considerable potential which the Horizon platform will offer once in place. The combined experience of the Working Group should prove a valuable source of ideas and contacts for business opportunities and future revenue streams.”

So focusing on the second area, really. You’ve said in your witness statement:

“I thought it was important that subpostmasters, via the NFSP and trade unions, via the CWU and Communications Managers Association, were engaged and involved in the working group so that they could explain what was actually happening on the ground.”

Was that your intention?

Sir Ian McCartney: Yes. Oh, yes. I mean, although I’ve got all my input and sympathy is with the employees, unless I knew what was going on, I wasn’t prepared just simply to take the views of people at a hugely elevated level of any of the businesses, given that their line may well have been the right line, but I also wanted to know on the ground what were people feeling, what were they facing, and what was their knowledge? How much information they were given to ensure that their members had a sense of what was going on and had a chance of putting a view if they thought there was a view that needed to be put.

Mr Blake: Can we look at BEIS0000355, please. This is again, another ministerial submission this time from David Sibbick, 28 May. Can we look at that paragraph there. It’s your D62 but, again, I really don’t think – I’m just going to read to you a few sentences. It says:

“The second issue is to ensure that the remaining development phases of Horizon, including large scale live trials are completed without further slippage; and most crucially that the rollout of the system following acceptance to all offices within the network is accomplished in a smooth and timely fashion. The CWU and NFSP members will be in the front line of the action during these phases and both organisations have much to contribute to the successful completion of these phases.”

Does that make the same point: that your vision for the group would be that the CWU and NFSP being on the frontline would be an important component of that group?

Sir Ian McCartney: Yes, as was the National – although it’s not mentioned in that paragraph, that would include the National Federation, most assuredly.

Mr Blake: To make the point once more, let’s look at NFSP00000064. This is a letter from you to Colin Baker at the National Federation of SubPostmasters, 7 June 1999, and this is talking about the Horizon Working Group, and its aims and objectives. It’s the final paragraph on that page that I’d very briefly like to take you to. It outlines – we talked about the three areas. This is talking about the second area. It says:

“The second area covers the remaining development areas of Horizon, including large scale live trials, system acceptance, and rollout of the system smoothly and in a timely fashion to all offices within the network followed by the migration from paper-based methods of benefit payment to ACT-based payments accessible at post offices. I believe that the Working Group could provide a valuable forum for bringing pressure to bear where needed and for seeking solutions to any problems that may arise.”

That’s the same point being made in a letter there to Colin Baker of the NFSP.

Sir Ian McCartney: Mm-hm, yes.

Mr Blake: You actually launched the working group at a CWU conference. We can see that at BEIS0000357.

Sir Ian McCartney: Yes.

Mr Blake: Do you remember this –

Sir Ian McCartney: Yes, I also – at the same time, I informed them of the purchase of the German postal service. I don’t mean their national post office. It was a group of distributors in Germany of parcels, et cetera, and having spoken to the chief executive, John Roberts, at the time, it was a potentially important marketplace which they would want to – need to get into, given that the German, French, Dutch and other parcel services and post offices were becoming active in the British market.

Mr Blake: Thank you. So we’re here now in May 1999. Your evidence so far has been that there wasn’t a significant Government study or you’re not aware of a technical study between the Montague report and the summer of 1999, and also that Government civil servants weren’t that knowledgeable about technical matters. How important did you see, at this time, these meetings to be the forum to raise technical issues with Horizon?

Sir Ian McCartney: I thought it was critical, and it was incumbent on me and then, subsequently, I didn’t last as chair very long. I was out the door and on to the Cabinet Office. I felt it was a duty of care towards people that this system wasn’t just a one-line press release. We’ve got this group, I wanted it to be a working body recognised by all concerned, treated with respect, and one that views would be listened to and taken into account in an effective way.

Mr Blake: Can we look at NFSP00000203. This is the note of the first meeting on 22 June. Can we go over the page, please. So this is the first meeting, 22 June. You’re there present, along with the Union, Association and NFSP. Can we go over the page, please, to page 3 and there are two paragraphs that I’d just like you to give a little bit more detail about. In this top paragraph, it says:

“There was a need to establish exactly what POCL was buying. ICL have not allowed access to policy so that they could determine this and have insisted that it is not a contractual issue. They have however indicated that they are willing to talk informally. POCL consider the issue to be too important to the future commercial prospects of the projects to rest on a purely informal and unenforceable indication …”

I apologise for just quickly taking you to one paragraph, but are you able to assist us with that at all?

Sir Ian McCartney: That’s a classic – if you don’t mind me saying – reason why we established the group because, unless we had the group, it is absolutely certain that the key people in the frontline would have no knowledge of this difficulty. None whatsoever. Therefore this was a matter for the group to consider and, from that, what actions or recommendations they wanted to make, or whether they just wanted to say “Well, you as ministers get on with this. Sort this out and come back to us with what you’re proposing”.

Mr Blake: I’m now going to read to you paragraph 6, and it’s one that you may have already seen. It says:

“Mr McCartney said that the rollout issue was crucial; he was emphatically not prepared to accept getting away from the commitment to 2001. Slippage would make the wider discussions on government usage of the network impossible. If there were problems with software, training, etc, then these should have been flagged up earlier, and must now be resolved in a way that enabled the 2001 timetable to be recovered.”

It seems to be your position expressed there that software issues would have to wait. Do you agree with that?

Sir Ian McCartney: Not wait. I was wondering if I can – what I read here is that I’m saying is that these should have been dealt with earlier and we’ve got to deal with them now. And it’s got to be dealt with, because they’d not been dealt with earlier, and the timescale and the commitment that was previously given. And so the pressure that was on me, as a minister, and the ministerial team and their technical people, was to ensure that that – those issues were resolved and resolved effectively, and hopefully maintain the commitment to 2001, which wouldn’t be easy to do, given the number of years the commitment – the previous commitments were out of date.

And so that’s what that means. It’s not dealing with issues that need dealing with, it’s complaining that the slippage should never have happened in the way it did, and when it did happen, it should have been dealt with. This goes back again to the senior reporting officer role, et cetera.

Mr Blake: It may be suggested that the impression that you are giving at that meeting is that speed was now more important than technical concerns. What would you say about that?

Sir Ian McCartney: No. I’m simply telling them, reminding them what the commitment was and that the slippage was now causing these difficulties. But that doesn’t suggest, from me, that I would have – “Well, let’s forget it, let it drop off the end of the truck”. Far from it. I wanted this to be resolved. But it was important that the key people on the frontline there knew what was going on, and what the consequences could be, and the consequences could be – and I can’t remember if it did happen – was that the 2001 commitment would be passed.

Mr Blake: You’ve said that you were dependent on the CWU and NFSP raising concerns at this stage about the technical issues. Do you think that the atmosphere was such that they were concerned that they shouldn’t raise concerns at that stage because it would delay rollout?

Sir Ian McCartney: Are you suggesting that that’s what the union’s positions were? Is that what you’re saying to me?

Mr Blake: Well, if they were to suggest that it wasn’t really an atmosphere in which they could raise technical issues, because of those kinds of time pressures that you’ve mentioned at paragraph 6 there, would they be right in that or not?

Sir Ian McCartney: No, but I can understand that that’s why they’re all on there. Their interest is slightly different from subpostmasters, although they were committed to making sure the subpostmasters were dealt with very well. And it may well be, remembering they were already in discussions with Government senior ministers, including the Secretary of State, regarding the drafting of the White Paper, and it may well have been tactically they wanted to ensure that, in the White Paper, if required, there would be some input/recognition of issues relating to this.

And that may well have been what the case was: that they wanted to – as well as making comment here, they wanted to keep open the door that they had directly to the Secretary of State and others involved in the drafting of the White Paper.

Mr Blake: Is it your evidence that the atmosphere was such during those meetings that the unions and NFSP were fully able to raise technical concerns, should they have had them?

Sir Ian McCartney: Yes. Absolutely no doubt. That’s what the meetings were there for: to hear from them.

Mr Blake: Can we look at NFSP00000471, please. This is a report of the NFSP National Executive Council. It’s a document that we’ve seen several times in this Inquiry. Can we look at page 27. Page 27 at the bottom contains a summary of the same meeting, so 22 June meeting. If we go over the page, it says – a little bit further down, please.

It records as having been discussed at that first meeting:

“The subject of systems faults was raised and the NFSP were given assurances that there would be software improvements to cure the present difficulties. The Federation were asked for more precise numbers of Subpostmasters who were experiencing difficulties as this information would assist them to provide us with the help we require.”

That reference to the subject of system faults being raised, that is contained in the NFSP’s note of the working party meeting of 22 June but it doesn’t appear in the official minutes or note of the working party meeting. Is it something you remember being raised by the NFSP?

Sir Ian McCartney: Oh, yes. I mean, that was clearly raised, and it was raised alongside – because I was acutely aware, on the statement that I’d given to call the meeting, about the importance of the trials and the basis for them, and the range of them. So yes, I remember that. Why it’s not in the minutes, I don’t know. It’s too far away.

It wouldn’t be my part trying to stop it. The minutes are done by the civil servants, and yes, we get them and we’ve got to approve them. So I must have approved it but to be honest with you, that should be – should have appeared.

Mr Blake: So you draw recall the NFSP having raised system faults during that meeting?

Sir Ian McCartney: Yeah, not just during that meeting. They’d raised them – yeah, they’d raised them – Mr Baker had raised them before, if I remember correctly.

Mr Blake: Actually, if we could go back to that document again sorry, look at page 23. This report goes on to minute the meeting of the NFSP. So that took place after that first Working Group meeting. This is, again, something you may have seen during this Inquiry. If we look a little bit further down, there’s quite a lot of criticism from subpostmasters about the system that’s then available. It says, for example:

“There was general discussion on the severe difficulties being experienced by subpostmasters who are already running an automated system. Seven sheets of comments from the North East had been passed to Mr Dave Miller.”

Pausing there, do you remember that at all? Did Dave Miller ever mention to you that he had been passed –

Sir Ian McCartney: Who’s Dave Miller?

Mr Blake: From the Post Office?

Sir Ian McCartney: No, I don’t recognise it.

Mr Blake: “The difficulties and trauma being experienced by some subpostmasters were giving rise to concerns for their health and emotional wellbeing. It was felt by some that a tragedy was not far away if something was not altered soon. The software was considered to be poor quality and not intended to run such a huge network. The system is based on ECCO which was originally written for a network of 700 – not 15,500.”

Perhaps we can go over the page. Similar concerns continue to be expressed and there’s a mention there of the General Secretary assuring the meeting that Mr David Miller had been informed of the difficulties in no uncertain terms. Sticking with that paragraph, it says:

“We cannot continue to have experienced subpostmasters/mistresses in distress on the telephone struggling until all hours to balance. These situations must not be permitted to arise.”

Was that level of concern being raised, to the best of your recollection, at the Horizon Working Group meetings?

Sir Ian McCartney: That specific example, no.

Mr Blake: Not that specific example, but perhaps that subpostmasters were distressed by the new system?

Sir Ian McCartney: Well, if the report that went to Mr Miller had actually come to our committee, I would have seen it and would have dealt with it. That was the whole purpose of the committee. I don’t recognise Mr Miller. I apologise to him if he’s ever met me, but I just don’t remember him in or getting any information from him. And I’m sure if he had sent me information, it would appear in the documents.

Mr Blake: So, to the best of your recollection of those Horizon Working Group meetings, was that kind of information the – certainly the emotion that we’ve seen that’s raised at that meeting, or the detail of problems that were being raised at that meeting – were those kinds of things being raised at the Horizon Working Group or not?

Sir Ian McCartney: As a constituency MP in an area where Post Office closures had been going on apace, and also as postmasters and mistresses were coming up for retirement, the difficulties that were then apparent in securing new ownership, and so – and I was not unaware of the emotional distress and concern and worry that people had, and understandably so, given the potential changes that were to take place and the length of time that it had been taking.

We’re talking years here. They were having to speculate what was going to happen to their business, themselves and the technology and how they would use it. I mean, these people had been under pressure for such a significant time, and that’s one of the reasons that we wanted to ensure that we got a settlement and got it in an effective way, or this would just continue into the future, and that would be absolutely wrong.

Mr Blake: But we’re now talking about a position where certain subpostmasters do have the system and are raising concerns about the software, et cetera?

Sir Ian McCartney: Yes.

Mr Blake: Mr Baker’s evidence this morning was that he didn’t think that the working group was the forum to raise those kinds of technical issues. Is your evidence that those kinds of technical issues were, in fact, raised at the Working Group or not?

Sir Ian McCartney: What would have been very helpful – I’m not criticising him, far from it – he worked with me over a significant period and so we knew each other pretty well.

I would say that his reasoning was a quite clear one, in that he had access to the people who were responsible for dealing with these issues, and so he went direct to them. The issue is if we’d known about it, I could do something effectively. Because I don’t know what the outcome was with Mr Miller. But, certainly, if we’d known as a committee – because you’ll see in my letter it said about raising issues on the frontline. It was about the frontline and what was happening to it that was critically important to me.

Mr Blake: Just so we’re absolutely clear, because I appreciate we’ve been going for some time this afternoon, were those kinds of issues in fact raised at the working group or do you think that they were raised separately with Mr Miller and the Post Office?

Sir Ian McCartney: Well, it would seem that that’s the case with Mr Miller and the Post Office.

Mr Blake: But you’ve said also that you were, in any event, aware because those kinds of issues –

Sir Ian McCartney: Yes.

Mr Blake: – as a constituency MP?

Sir Ian McCartney: Yes, and that’s why I had the empathy I did to get the matter resolved and also to ensure that frontline voices were heard.

Mr Blake: When you say “to get the matter resolved”, how was it resolved?

Sir Ian McCartney: Apologies. I don’t mean that individual case.

Mr Blake: No, not at all. I just want to make sure there’s absolutely no confusion. We’re talking now the summer of 1999 and you’ve said that there were concerns raised at a constituency level. What period was that?

Sir Ian McCartney: That was over quite a considerable period, following the miners’ strike. In areas like my own, there was significant closures.

Mr Blake: Ah, so your concern was closures, but what about technical problems with Horizon?

Sir Ian McCartney: No, I can honestly say I’d had no technical problems raised with me, but what I had noticed and had raised with me was people’s anxiety, concern, lack of information, if you want, all sorts of things. And that takes its toll on people, their mental health suffers from that, and the decision making about the next stage in their life is acutely upended, and that’s why these signs are as important as some of the technical difficulties that arose.

Mr Blake: So the concerns that were being raised to you at the Horizon Working Group concerned concerns about the Post Office Network generally, rather than technical issues with Horizon software, for example, the kinds of things that we saw in those NFSP minutes?

Sir Ian McCartney: Yes. I think that would be fair to say. I apologise if I forgot, and there was issues raised by Mr Baker.

Mr Blake: Not at all. In fact, his evidence was to the contrary: that he didn’t see the Horizon Working Group as the forum to raise those kinds of technical issues.

Sir Ian McCartney: Okay.

Mr Blake: Was that the impression that you had at the time?

Sir Ian McCartney: No, not an impression. I mean, it was clear from what I’d said verbally, what I’d written in calling the group together, was I wanted to know what the frontline was experiencing, including, of course, what they thought of the system that was going to be put in, or was being put in, and so that was a major point of why I wanted it to work.

Mr Blake: I’m going to look very briefly at the next minutes of the 7 July, that’s NFSP

Sir Wyn Williams: Mr Blake, before you do that, I think I should let everybody know that I cannot sit beyond 4.30 tonight. I hadn’t for a minute thought that these two witnesses would take us right to the end of the day, so to speak.

Mr Blake: I know, sir. I apologise for that.

Sir Wyn Williams: I mean, since Sir Ian is remote, it’s not as critical, in the sense he might be able to come back much more easily, rather than try and cram everything into five or six minutes.

Mr Blake: Absolutely.

Sir Ian, are you able to attend tomorrow morning?

The Witness: Yeah, I’ll just check, if I can, my diary. It sounds like I’ve got a full-time job. It just seems that way sometimes, volunteering. I think I’m – I’ll just double check. I may have to cancel an optician.

Mr Blake: We won’t be longer than – certainly not more than an hour tomorrow morning.

Sir Wyn Williams: It doesn’t have to be tomorrow morning, does it, Mr Blake, in the sense that Sir Ian could be fitted in, so to speak, at some suitable moment?

Mr Blake: Yes.

The Witness: Tomorrow is Friday?

Mr Blake: Tomorrow is Thursday.

The Witness: No, Thursday, sorry. Other than having a Scottish Labour Party dinner, which I’m not going to, we’re free.

Sir Wyn Williams: So could you come back at 10.00 tomorrow morning, Sir Ian?

The Witness: Yes, I can.

Sir Wyn Williams: Well, then, I propose to call a halt at this point, Mr Blake. Yes?

Mr Blake: Absolutely.

Sir, I wonder, can I just take – it may be that we need to start slightly earlier tomorrow, only because we have, I think, it’s Alan Milburn tomorrow, who may have other commitments. Would it be a problem for everybody if we started at 9.30 tomorrow?

Sir Wyn Williams: Well, for Sir Ian and I, it’s probably not a problem at all but, as for the people in the hall, they’d better say now.

Mr Blake: Everybody seems to be in agreement that 9.30 is absolutely fine tomorrow.

Sir Wyn Williams: Right, we’ll break now and start again at 9.30 tomorrow, so as to ensure that everybody who is due to give evidence tomorrow has sufficient time to do it.

Mr Blake: Thank you very much.

Sir Wyn Williams: Thank you all.

The Witness: Thank you.

(4.25 pm)

(The hearing adjourned until 9.30 am the following day)